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Strategies & Market Trends : Bankruptcy Predictor Model

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To: Razorbak who wrote (1)3/15/1999 1:04:00 PM
From: Paul Berliner  Read Replies (1) of 477
 
People call it the Z-Ratio.
I remember reading that its most effective 3 statments prior to bankruptcy, however the number of statements is irrelevent because the highest reading may not be the statement immediately prior to the bankruptcy, leaving a long period of second-guessing as to when the company would throw in the towel. This equation would be a jewel if you could find a company that hasn't been sold down to garbarge status yet and shows bankruptcy potential. I remember trying this out on a bunch of companies a couple years back and the only ones that tested positive were penny stocks with no receivables or revenues.
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