### Strong Altman Z-Scores

The goal of this screen is to find stocks with strong Altman Z-scores (credit risk indicator), positive cash flow, and increasing profits.

You can view the latest results here: Screen: Strong Altman Z-Scores

##### About the Altman Z-Score

The `Altman Z-Score`

estimates the risk of bankruptcy within the next two years for a company. The methodology to calculate a `Altman Z-Score`

is based on research published by Edward Altman in 1968. Edward Altman is a renowned Finance professor at NYU's Stern School of Business. A company's Z-Score is calculated using metrics derived from its Income Statement and Balance Sheet.

The formula can be summarized as follows:

```
Altman Z-Score =
1.2 x Working Capital / Total Assets
(+) 1.4 x Retained Earnings / Total Assets
(+) 3.3 x Earnings Before Interest and Taxes / Total Assets
(+) 0.6 x Market Capitalization / Total Liabilities
(+) 1.0 x Total Revenue / Total Assets
```

`Working Capital / Total Assets`

measures the liquidity of the company's assets

with respect to the size of the company`Retained Earnings / Total Assets`

is used as an indicator of past

profitability, company age, and profit potential`Earnings Before Interest and Taxes / Total Assets`

measures the current

profitability and asset efficiency of the company`Market Capitalization / Total Liabilities`

measures the amount of leverage

based on the company's future profit potential and the value ascribed to its equity

in the current economic environment`Total Revenue / Total Assets`

additional measure of current

profitability and asset efficiency

**Interpreting the Altman Z-Score**

A company is considered to be in the Safe Zone if it scores greater than **2.99**. If a company scores between **1.81 and 2.99**, it's considered to be in the Gray Zone while a score below **1.81** is considered Distress Zone.

##### Filters

In this section, I'll summarize key filters used in the default `Strong Altman Z-Scores`

screen:

- Altman Z-Score > 3
- Levered Free Cash Flow > $0 million
- EBIT Growth > 0

**Filter 1: Altman Z-Score**

finbox.io makes it easy to find stocks that have strong `Altman Z-Scores`

. You simply need to add the `Altman Z-Score`

filter:

**Filter 2: Levered Free Cash Flow**

`Levered Free Cash Flow`

(LFCF) represents a company's cash flows after interest payments on outstanding debt. These cash flows are typically retained by the company or distributed to shareholders in the form of dividends. I wanted to exclude companies with negative LFCF so I added the following criteria:

**Filter 3: EBIT Growth**

`EBIT`

is a common measure of profitability and stands of Earnings before Interest and Taxes. I wanted to exclude any companies with declining profitability:

##### Downloading Results

Once the screen returns the relevant matches, you can either research the individual names further or create a portfolio based on the results.

To add any match to your **Watchlist**, just click the icon:

You can also **Save** the screen run again at a later time or **Download** all the matching results: