iBusiness, 2018, 10, 21-39 http://www.scirp.org/journal/ib ISSN Online: 2150-4083 ISSN Print: 2150-4075 DOI: 10.4236/ib.2018.101002 Mar. 27, 2018 21 iBusiness Altman’s Bankruptcy Prediction Model: Test on a Wide Out of Business Private Companies Sample Mauricio Takahashi, Fernando Henrique Taques, Leonardo Basso Programa de Pós-Graduação em Administração de Empresas (PPGA), Mackenzie Presbiterian University, São Paulo, Brazil Abstract This study tests the accuracy of the Altman bankruptcy prediction model for a wide private companies’ sample that went bankrupt in the years 1985 to 2013. Financial ratios used in the model calculations, Z’-Score (Altman’s Z for pri- vate companies) also provide useful information on the solvency and proba- bility of bankruptcy for privately held companies from the sample. The find- ings do not support the assertion that the Z’-Score can be generalized to countries and sectors different from industrial sector. The general number of bankruptcies may be an antecedent variable to certain economic and/or fi- nancial crises, but the results indicate a correct identification of bankruptcy risk only to two thirds of the sample of companies. Keywords Z’-Score, Private Companies, Bankruptcy 1. Introduction The economic literature suggests that business activity is closely linked to the process of uncertainty. In this case, organizations, irrespective of the nature of their activity, may go through certain financial difficulties, even in periods that are not characterized by financial instabilities. [1] addressed the issue of corporate bankruptcy as an important phenomenon, because it compromises the financial performance and the continuity of business activity. Therefore, they stress that it is of interest to identify a possible signaling of this scenario, so that it is possible to decide with the purpose of reversing ad- versity and properly structuring the organization with the aim of reducing the possibility of bankruptcy. A seminal contribution on the subject was made by How to cite this paper: Takahashi, M; Taques, F.H. and Basso, L. (2018) Altman’s Bankruptcy Prediction Model: Test on a Wide Out of Business Private Companies Sample. iBusiness, 10, 21-39. https://doi.org/10.4236/ib.2018.101002 Received: March 2, 2018 Accepted: March 24, 2018 Published: March 27, 2018 Copyright © 2018 by authors and Scientific Research Publishing Inc. This work is licensed under the Creative Commons Attribution International License (CC BY 4.0). http://creativecommons.org/licenses/by/4.0/ Open Access