Research on the application of the Z-value analysis method in financial risk management of enterprise

Zhou Jinlin 

Department of economy and management, Henan Polytechnic Institute, Henan Province, China, 473000

As a method of measuring the bankruptcy risk of enterprise invented by the US scholar Altman, the Z-value analysis method is widely applied by people. According to the prediction of the model, an enterprise will go into bankruptcy if the Z-value is less than 1.20; it is the grey area if the value is between 1.20 and 2.90; the enterprise has no bankruptcy risk if it is greater than 2.90. Although the Z-value analysis method has been used for measuring the bankruptcy risk of enterprises for a long time, in fact, it reflects the risks through the financial indicators of the enterprises, so it can be widely used for the financial risk management of enterprise. Through analysing the connotation of the Z-value analysis method, the paper explores the application of the method in the enterprise risk management from the specific calculation perspective and discusses the problems in application. Finally, some policy suggestions are provided for relevant decision-maker.