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

To: Razorbak who wrote (34)	3/15/1999 3:51:00 PM
From: Paul Berliner	Read Replies (1) \| Respond to of 477

Many things make up current liabs. aside from st debt or current portion of lt debt - the most common being accounts payable & accrued expenses - other items include income taxes payable, payables to affiliates, deferred revenue, etc. The point being that a company will not declare bankruptcy unless it cannot pay its creditors - i.e. it would default on its debt - thus a high payable to affiliates balance, for example is meaningless. The working capital ratio is meaningless because it includes inventory, which a company on the verge of bankruptcy is likely to be having trouble managing - the better ratio is the 'quick ratio.' I hope this post has fewer typos than the prior!