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

To: Paul Berliner who wrote (37)	3/15/1999 4:29:00 PM
From: RockyBalboa	Respond to of 477

There are few, but only financials, UC, WFSG and SFCFQ. Would be interesting whether that works for troubled financials too in a modified version. Sure, the Market value of the "book" would be crucial and hard to estimate and for the sales proxies would have to be defined, like (net) interest and commish earnings, with a modified (interest bering) asset base. Any thoughts? C.

To: Paul Berliner who wrote (37)	3/15/1999 4:30:00 PM
From: rakitup	Read Replies (1) \| Respond to of 477

Razor: Ever heard of reading the balance sheet, the income statement, ding the ratios, etc.? Combining these with backlog, lack of earnings, and lack of hype you can usually predict the demise of a company just by getting a feel for the numbers. And after all, a company does not need to declare bankruptcy in order to be a profitable short. That's where puts are valuable. Example: BA isn't going out of business but it is likely to suffer during the current year (check its numbers)so I bought the Aug in the money puts. Great thread. And, thanks for the formula. Makes a great confirmation tool. Rak up a winner

To: Paul Berliner who wrote (37)	3/15/1999 10:47:00 PM
From: Q.	Respond to of 477

Syquest had a negative Z = -6.2, just 3 months before declaring bankruptcy. That was using the 10Q filed 8/98 and the stock price that day. They went BK in Nov. 98. The main things that drove that ratio so far negative were retained earnings of -$315 M and EBIT of $-146 M, both hugely negative. I'm sure this stock was in negative Z territory for many quarters before it went under. It lasted about 2 years longer than otherwise possible, thanks to toxic convertible financing. This probably gives you an extreme example of how bad a co. can get before they finally go bankrupt.