Altman Z-Score vs Piotroski F-Score
The Z-Score estimates how likely a company is to go bankrupt; the F-Score grades whether its fundamentals got better or worse over the past year.
The difference
The two scores answer different questions, and neither answer substitutes for the other. The Altman Z-Score, built by Edward Altman in 1968, combines five financial ratios — covering profitability, leverage, liquidity, solvency, and asset turnover — into a single weighted score that estimates a company's risk of bankruptcy within about two years. The Piotroski F-Score, created by Joseph Piotroski in 2000, is a 0-to-9 scorecard built from nine pass/fail tests across profitability, leverage/liquidity, and operating efficiency. The structural difference is what each one is sensitive to: the Z-Score reads the level of a company's financial condition at a point in time, while the F-Score rewards year-over-year improvement — it asks whether things are moving in the right direction, not how far from the edge the company currently sits. One is a distress gauge; the other is a fundamental-momentum checklist.
Side by side
| Aspect | Altman Z-Score | Piotroski F-Score |
|---|---|---|
| What it measures | Risk of bankruptcy within about two years | Fundamental strength across nine pass/fail tests |
| Output | Weighted score: below 1.8 distress, 1.8–3.0 grey zone, above 3.0 safe | Whole number 0 to 9: 8–9 strong fundamentals, 0–2 weak |
| Level vs. change | Reads the level of financial condition at a point in time | Rewards year-over-year improvement, not static snapshots |
| Inputs | Five weighted ratios: profitability, leverage, liquidity, solvency, asset turnover | Nine binary tests: profitability (4), leverage/liquidity (3), efficiency (2) |
| Origin | Edward Altman, 1968 | Joseph Piotroski, 2000 |
| Where it does not apply | Built for public manufacturers; not reliable for banks, insurers, many service firms | A relative filter, not a standalone signal; designed to sort cheap value stocks |
Which one to use
Reach for Altman Z-Score when…
Reach for the Z-Score when the question is about survival: can this company keep paying its obligations, and how close is it to the distress zone? It is the right lens when leverage, working capital, and solvency are what you are trying to read. Check first that the company is the kind the model was built for — it is not reliable for banks, insurers, or many service firms, and the Z' and Z'' variants exist for private and non-manufacturing companies.
Reach for Piotroski F-Score when…
Reach for the F-Score when the question is about direction: did profitability, balance-sheet strength, and efficiency improve over the last year, or deteriorate? It was originally designed to find healthy firms among cheap value stocks, so it does its clearest work as a filter across a group of companies rather than as a verdict on one. Because it is built from year-over-year comparisons, it says little about how strong the starting point was.
The common mistake is reading a high F-Score as evidence of solvency. A company in real trouble can pay down long-term debt, let its current ratio rise, and issue no new shares — collecting F-Score points for improvement — while its Z-Score still sits below 1.8, because the improvement started from a distressed level. The mirror error is just as common: a large, stable firm can hold a Z-Score above 3.0 for years and still land only mid-range on the F-Score, because most of the nine tests award a point only when something improves, and a firm whose fundamentals are flat improves on none of them — it collects points only from the level tests it passes automatically, such as positive net income and positive operating cash flow. A rising score is not a safe score, and a safe score is not a rising one.
How Quintarthai uses them
On Quintarthai, both models feed Quinn's company deep-analysis page in /app/ rather than standing alone: an Altman-Z style distress signal contributes to the risk-first QuinnScore and its bankruptcy/delisting flags, while Piotroski-style fundamental-quality signals feed Quinn's bull/bear and QuinnScore analysis, with quality metrics also available across the screener and company pages. Input figures carry click-to-source provenance receipts, and inputs are marked "n/m" where the model does not apply (for example, the Z-Score on banks). They are provided to explain a company's reported financial condition — they are educational context, not a recommendation.