Model of Prediction of Corporate Financial Distress

1. David Bonillo Sevilla
Ángela Encinas Campos
Juan Pedro Martín Paniagua
Alberto Puchades Sanjuan

2. 1. Ratios
2. Our Model
3. Company’s A & B
4. Comparison with Springate

3. OPM
Available
Ratio
ROE ROA
Net Working
Capital
Assets
Turnover
Solvency
Ratio
Debt Ratio Quick Ratio
Debt to
Equity Ratio
Warranty
Ratio
Liquidity
Ratio
Current
Ratio
Short Term
Debt Ratio
TLT
Defensive
Test
Margin in
Sales
Financial
Leverage

4. OPM
Available
Ratio
ROE ROA
Net Working
Capital
Assets
Turnover
Solvency
Ratio
Debt Ratio Quick Ratio
Debt to
Equity Ratio
Warranty
Ratio
Liquidity
Ratio
Current
Ratio
Short Term
Debt Ratio
TLT
Defensive
Test
Margin in
Sales
Financial
Leverage
Finally, we choose this 4 ratios:

5.  NET WORKING
CAPITAL
 DEBT RATIO

6.  AVAILABILITY
RATIO
 QUICK RATIO

7.  Taking companies from bankruptcy
companies we obtain the Maximum to know
which companies are bankrupt and which are
not.
MAX: 0,610551922

8. NET WORKING CAPITAL QUICK RATIO DEBT RATIO AVAILABLE RATIO MEDIA RESULT
0,3551652 6,965399772 0,026680999 17,72735479 6,26865019 1
0,403547129 2,01219838 0,203235622 6,281855627 2,225209189 1
0,42876529 0,749054528 0,135290353 0,710257399 0,505841893 0
4,187232599 4,967722196 0,05874126 14,244778 5,864618515 1
0,98071885 0,26465491 0,186569578 0,768655688 0,550149756 0
0,479578566 0,860470262 0,198678433 2,705044395 1,060942914 1
0,669016341 0,48957524 0,181814816 0,754426296 0,523708173 0
0,562772113 0,509707926 0,091167705 0,108299965 0,317986927 0
1,072016887 0,923229393 0,194785192 2,20479466 1,098706533 1
3,50622915 2,054863732 0,202934159 4,9557978 2,67995621 1
0,585408146 0,561120287 0,182452999 0,559070183 0,472012904 0
1,38424713 2,473204304 0,032166111 3,599913998 1,872382886 1
1,466762161 1,04585915 0,189343656 2,136834124 1,209699773 1
-0,586350529 0,377554239 0,144801504 0,864122368 0,200031896 0
2,168328402 2,345608381 0,206777524 5,751707124 2,618105358 1
0,966206156 0,863944272 0,151058594 1,350271871 0,832870223 1
0,396026914 0,560919458 0,161659827 0,781523591 0,475032448 0
0,264753001 8,685042112 0,207561576 29,59299593 9,687588154 1
0,309082685 0,645060951 0,098734395 0,13425068 0,296782178 0
1,47360386 0,75402071 0,204544509 2,542923995 1,243773269 1
1,403584824 0,920325597 0,080839865 2,151131398 1,138970421 1
0,824226775 0,934332274 0,187888963 1,658217225 0,901166309 1
1,204157793 0,962771088 0,180142093 0,076021027 0,605773 0
-1,302731025 0,082964719 0,142380955 0,026748076 -0,262659319 0
1,380722619 0,994565714 0,177459282 1,417782435 0,992632512 1
0,98810713 0,478931028 -0,102344735 0,010800777 0,34387355 0
0,441770172 0,335627631 0,172072357 0,290728276 0,310049609 0
1,148217954 0,50264682 0,16354952 -0,000667774 0,45343663 0
0,231034548 0,192445867 0,106672987 0,145088534 0,168810484 0
We verify that our model works with the companies of the excel "healty".

9.  We apply the model to companies A and B:
 According to our model, companies A and B
are healthy.
COMPANY’S NET WORKING CAPITAL QUICK RATIO DEBT RATIO AVAILABLE RATIO MEDIA RESULT
COMPANY A 1,799347871 0,36437563 0,189678076 1,445387504 0,94969727 1
COMPANY B 0,573835686 0,654565275 0,131878823 2,132985062 0,873316211 1

10.  MODEL SPRINGATE:
 A= Net Working Capital/Total Assets
 B= EBITDA/Total Assets
 C= EBITDA/ Short Term Liabilities
 D= Total Sells/ Total Assets
Z= 1,03*A+3,07*B+0,66*C+0,4*D

11. Net working capital/total
assets
EBITDA/total assets
EBITDA/short term
liabilities
Total sells/total assets RESULT Z
0,054268318 0,042403 0,060831189 1,112556929 0,67124493 0
0,215223097 0,038823272 0,054456205 3,906714786 1,93949424 1
0,374194206 0,019950569 0,059527882 2,068846026 1,31349509 1
0,121337984 0,0702762 0,124934268 0,734806562 0,7171053 0
0,030090587 0,015911776 0,024431543 1,389602206 0,65180816 0
-0,205699799 -0,000203981 -0,000272141 1,199988344 0,26731871 0
-0,5226642 -0,102358927 -0,134774665 0,802451434 -0,62055674 0
-0,100110142 0,159497514 0,319556271 1,35072783 1,13774219 1
-0,068480407 0,091414793 0,124434681 5,576985875 2,52302984 1
-0,005359167 0,007729568 0,011382607 3,704524374 1,5075321 1
-0,170972093 0,146218487 0,486134106 0,539516547 0,80944463 0
-0,213578186 -0,10033389 -0,216238906 1,341346689 -0,13418958 0
0,36694178 0,257416908 0,494783479 1,831288572 2,22729247 1
0,180004586 0,130703967 0,163230241 4,382251777 2,44729857 1
0,194638604 0,051622476 0,074246722 1,548142255 1,0272185 1
0,163743372 0,382670008 0,748290793 1,874366296 2,58707104 1
0,079047662 0,056629153 0,111003691 2,32547191 1,25872179 1
0,077268515 0,064152826 0,083947393 1,388267161 0,88724789 1
0,148821674 0,049576297 0,113094398 0,99437125 0,77787636 0
0,198111898 0,040955158 0,052189297 1,747258087 1,06313576 1
0,250723129 0,124320259 0,285202389 1,130973042 1,28053081 1
0,103041972 0,16380439 0,324287239 2,489949942 1,81902226 1
-0,03775399 0,126530351 0,291580502 0,788667393 0,85747166 1
-0,283747904 0,065818893 0,123411503 1,203465623 0,4726415 0
-0,746983194 -0,771907499 -0,555534502 1,947474659 -2,72681162 0
-0,407934625 0,084354817 0,122817118 1,128641097 0,37131236 0
0,071250623 0,080219233 0,158153242 2,015944195 1,23042 1
0,620467365 0,088033844 0,268757688 1,754834811 1,78865928 1
-0,009700477 0,051395507 0,081998371 1,235534377 0,69612539 0