Seminar 2: predicting bankruptcy
a). Bankruptcy risk of each firm (Z2):
Z2 2010: 6.56(413,706/699,791)+3.26(106,651/699,791)+6.72(23,944/699,791)+1.05(242,256/457,535)=6.16
Z2 2011: 5.43
Z2 2011: 6.56(244,412/2,821,252)+3.26(57,546/2,821,252)+6.72(266,156/2,821,252)+1.05(1,477,935/1,343,096)=0.57+0.066+0.63+1.155=2.421
Z2 2012: 2.613
The company I have chosen is Microsoft which has excellent results in these values so we can get from that that is a company that is riding in an appropriate way its business and their accounting framework.
Calculating the value of the Z2-Score we can see how developed is the company raising a value of 8.351 in 2012, that is clearly above the media and even above the media between the non bankrupt companies that is 7.7. These indicators mean health for the company and that it doesn't have risk of bankruptcy.
Daniel Fortea GÃÂ¡lvezComparing the value Z2-Score of Microsoft with the values Z2-Score of Pescanova and Finn we get that is much more bigger than FinnÃÂ´s ones and quite bit bigger that PescanovaÃÂ´s ones, on the first case the values of Finn are really low, 2.421
in 2011 and 2.613 in 2012, (lower than the average for bankrupts firms that is 4.06 but bigger than the high risk of likelihood or bankruptcy that is only 1.1. Now we are going to examine the values of Pescanova even we had known by the news that this values where altered in order to fulfill the pertinent supervisions and trials, the Z2-Score values are 6.16 for 2010 and 5.43 for 2011 that could give us the information to know that the company is healthy and everything goes right but they are obtained just for that by altering the numbers of equations and changing the quantities of any of the elements of the balance or the income statement that appear in the formulas for them.