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  • Writer's pictureOne Hat Research LLC

Simple Bankruptcy Prediction (Altman Z Doesn't Work)

Updated: 6 days ago

A simple ratio involving only stock-market capitalization and the face value of debt is a strong bankruptcy predictor when applied to firms with negative one-year returns. The ratio is interpretable as the minimum price at which a firm's debt must trade if the firm is solvent.

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Simple Bankruptcy Prediction
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