ASSESSING FINANCIAL STABILITY: A COMPARATIVE ANALYSIS USING ALTMAN Z -SCORE MODEL

Abstract

This research paper evaluates the financial stability of two leading Indian Banks HDFC Bank and YES bank using the Altman Z-score model. The Z-score is a well-established tool for predicting the likelihood of financial distress and bankruptcy by analyzing key financial ratios related to liquidity, profitability, leverage and market strength. The study has a step-by-step calculation of the Z score for both banks using their 2024 financial data offering a comparative analysis of their financial health.

The findings revealed that HDFC Bank with a Z-score of 1.376 falls within the gray Zone indicating a moderate financial stability and minimum risk of distress. The bank’s strong market valuation, consistent profitability and efficient asset utilization contribute to its overall stability. In contrast, Yes Bank with the Z score of -1.03 falls in the distress zone reflecting significant financial vulnerabilities the bank negative working capital, constrained profitability and low sales efficiency highlight the need for improved liquidity management and operational efficiency.