Page 175 - APM Integrated Workbook STUDENT S18-J19

Corporate failure
Evaluation of the Z score model
Advantages
 Objective measure of failure.
 Calculations are simple.
Disadvantages
 Scores are a guide only and do
not guarantee failure/success.
 Need further investigation if
score between 1.81 and 2.99.
 Figures open to manipulation.
 Only a good predictor in short-
term.
 50 years old.
 Based on a group of US
companies in a certain industry
sector so may not be relevant.
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