corporate failure prediction

corporate failure prediction
The use of various techniques to assess whether or not a company is likely to go into liquidation. One model, devised by Edward Altman, uses multivariate analysis based on the financial statements of a company to arrive at a Z score. An Altman's Z score of 1.8 or less is taken as an indication that the company may fail. Another technique is Argenti's failure model, which is used to calculate scores for a company based on defects of the company, management mistakes, and the symptoms of failure.

Accounting dictionary. 2014.

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