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Strategies & Market Trends : Bankruptcy Predictor Model -- Ignore unavailable to you. Want to Upgrade?

To: Paul Berliner who wrote (27)	3/15/1999 1:49:00 PM
From: Razorbak	Read Replies (1) \| Respond to of 477

Z-Score Index Paul: Thanks for your comments. I'd like to make just a few minor clarifications. <<People call it the Z-Ratio.>> IMO, the Z-score can't be a ratio because it has no denominator. The individual variables that make up the equation, however, are all ratios. <<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.>> I think you meant to say "because the lowest 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." Lower Z-scores correlate to higher financial distress; not the other way around. <<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.>> Do you remember how you conducted the screening? Was the process automated? Just curious, because I would like to conduct a similar screening. TIA. Razor