Bankruptcy Predictor Model Message Board

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Strategies & Market Trends : Bankruptcy Predictor Model

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To: Razorbak who wrote (161)	3/26/1999 6:20:00 PM
From: Bob Rudd	Read Replies (1) of 477

The links in the post are all I have to go on. Seems like the common sense essence of their work is that when the market-based value of the debt plus the equity drops below the book value of the debt that the risk of default is substantial. [Although this is not what the article states]. The term enterprise value is used, but I'm not sure this means the same thing to everyone that uses it. The volatility of the stock [and perhaps the bonds] would imply a probablility distribution of future prices. Their proprietary stuff would allow a precise probability estimate. Somehow I doubt they're going to post that info on this board, but maybe we can muddle together a way to somewhat confirm the Z-score using this market based info.

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