Page 163 - Microsoft Word - 00 P1 IW Prelims.docx

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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