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Old 02-09-2009, 11:21 AM  
ADL Colin
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Join Date: Feb 2001
Location: Tube Titans, USA
Posts: 11,929
For you investment freaks::

Edward Altman came up with a scoring system that predicts bankruptcy for companies back in the 60s. It's called the Altman Z scoring system. it has better than 70% accuracy in predicting bankruptcy within 2 years. Every investment I make I run it through altman z.

Here are a few links.
Wiki. http://en.wikipedia.org/wiki/Z-Score..._Analysis_Tool
White paper. http://www.nysscpa.org/cpajournal/old/16641866.htm
Book. http://www.amazon.com/Bankruptcy-Cre...02811&sr= 8-4
calculator. http://www.creditguru.com/CalcAltZ.shtml

This site has the altman z score calculated.
http://www.advfn.com/p.php?pid=finan...ymbol=NYSE%3AM

A few warnings I've had to discover myself.

1. It is not designed to work on financials.
2. there are two versions. One for manufacturers, one for non.
3. If a company has a large finance arm (GE, CAT) you should subtract out the financial receivables from the assets
4. You should subtract out goodwill and intangibles from assets
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