What's the meaning of Basic ratio analysis：Z-Score？

Basic ratio analysis refers to the process of evaluating a company's financial performance by analyzing various financial ratios. The Z-Score is a specific ratio used to assess a company's financial health and bankruptcy risk. It was developed by Edward Altman in the late 1960s and is based on five financial ratios: working capital/total assets, retained earnings/total assets, earnings before interest and taxes/total assets, market value of equity/book value of total liabilities, and sales/total assets. The Z-Score is a measure of a company's overall financial strength and is used to predict the likelihood of bankruptcy. Higher Z-Scores indicate a lower risk of bankruptcy, while lower Z-Scores indicate a higher risk of bankruptcy.