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Strategies & Market Trends : Bankruptcy Predictor Model
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To: Razorbak who wrote (121)3/28/1999 12:24:00 PM
From: Bob Rudd  Read Replies (1) of 477
 
Ohlson Model:
I found this which might cover coefficients:
<<In contrast, Ohlson's model (Model 4 in his 1980 paper, hereafter LGT)is a conditional logit model which permits an estimation of the probability of a firm's bankruptcy. This model does not consider any market variables but it include size (logarithm of total assets) as an explicit variable.
Since the LGT model measures the probability of failure (conditional on financial ratios), the values can only range from zero to unity, with low values indicating financial strength (low probability of bankruptcy) and high values financial distress (high probability of bankruptcy). We computed the bankruptcy probability for each sample firm based on his Model 4 as follows.
LGT = I /(I +[exp{(-2.63-267 *Log(AT) +5.63 * TL/AT) - 1.43*(WCAP/AT)
-2.35*(NI/AT) - 1.99*(OANCF/TL)1.56*D-.5092*(NI(t)
-NI(t-1))/(AbsNI(t)+AbsNI(t-1))*(-1)}]) (2)
where AT = Total Assets, TL = Total Liabilities, WCAP = Working Capital, NI = Net Income,
OANCF = CashFlows from Operating Activities >>

When I look at this my eyes glaze over [MEGO], but perhaps your experience can help you interpret and convert this into something we can use.

Source: This came from research paper -
A COMPARATIVE ANALYSIS OF AUDITORS' OPINIONS AND
BANKRUPTCY PREDICTION MODELS

Tae Ghil Ryu
E-mail: ryut@mscd.edu
and
Larry Lombard
E-mail: lombardl@mscd.edu

Department of Accounting
Metropolitan State College of Denver
Denver, CO 80217
(303) 556-3181
Fax: (303) 556-3966

ABSTRACT

This study compared auditors' accuracy in predicting firms' bankruptcy
with two well-known bankruptcy prediction models (Altman's Z-score and
Ohlson's Logit model) in conjunction with a new auditing standard.
Statement on Auditing Standards no. 59.
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