Argenti's Failure Model is a framework for predicting corporate failure, assessing company health based on internal factors.
A barometer stock is a security whose performance is regarded as an indication of the overall market movement, often signaling broader economic trends. In the USA, such a stock is frequently referred to as a 'bellwether security.'
Cash flow refers to the movement of cash into and out of a business, reflecting the inflows and outflows of capital within a specified period. It is a critical indicator of a company's financial health and sustainability.
This key financial metric measures a company's liquidity by assessing its ability to meet short-term obligations using its cash and marketable securities.
Credit Watch is a term used by bond rating agencies to indicate that a company's credit is under review and its rating is subject to change. The implication is that if the rating is changed, it will typically be lowered, usually due to an event that adversely affects the income statement or balance sheet.
Effective Net Worth is the sum of a firm's net worth and its subordinated debt, providing a more comprehensive view of financial health from the perspective of senior creditors.
Financial analysis involves evaluating businesses, projects, budgets, and other financial entities to determine their performance and suitability. This analysis is used to gauge a company’s financial health and operational efficiency.
Quantitative measures that help determine whether a company or group is likely to meet its financial obligations, including interest, dividends, and capital repayments.
The financial structure of a company refers to the specific mixture of long-term debt and equity that it uses to finance its operations. Understanding financial structure is crucial for evaluating financial health and making strategic business decisions.
The Fixed-Charge Coverage Ratio (FCCR) is a financial metric that reflects a company's ability to cover its fixed charges, such as interest and lease expenses, with its earnings before interest and taxes (EBIT). It's a key metric used by lenders and investors to assess a company's financial health and risk level.
The Free Asset Ratio is a key metric in the insurance industry, quantifying the market value of an insurance company's assets relative to its liabilities. It is used to gauge the financial health and stability of the insurer.
Denoting the position of a company lacking sufficient cash, or assets that can be quickly converted into cash, to meet the demands of creditors.
Impaired Capital refers to the situation where a company's total capital is less than the stated or par value of its capital stock, indicating financial difficulties or ongoing losses.
An interim dividend is a type of dividend paid to shareholders during a company's financial year, prior to the annual dividend payout. It serves as an indication of the company's current profitability and financial health.
Leverage ratios are financial metrics that evaluate the level of debt a business is using compared to its equity and assets. These ratios are crucial for analyzing the financial health and sustainability of companies.
Liquid assets are those holdings that can be quickly and easily converted into cash with minimal capital loss, playing a crucial role in assessing a company's liquidity and solvency.
Liquidity refers to the extent to which an organization's assets are liquid, enabling it to pay its debts when they fall due and to move into new investment opportunities.
A detailed analysis provided by an auditor, examining a client's financial statements in depth to ensure accuracy, compliance, and to provide insights into the financial health of the organization.
MD&A (Management Discussion and Analysis) provides a narrative explanation of a company's financial statements, offering insights into the company's performance, financial condition, and future outlook in a comprehensive manner.
Monetary Working Capital Adjustment refers to the changes made to the working capital of a company to reflect its current operational needs and financial health. It involves adjusting the components of working capital to ensure that they are aligned with the company’s operational activities and financial strategies.
Negative working capital occurs when a company's current liabilities exceed its current assets, raising concerns about its ability to meet short-term obligations and threatening its operational viability.
An essential liquidity measure that determines if a business can meet its short-term obligations with its most liquid assets.
Net worth represents the total value of an organization after deducting its liabilities from its assets. This financial metric is crucial for assessing the financial health and stability of an entity.
Positive cash flow refers to the amount of cash that a business generates from its operations, which exceeds the cash outflows. It is a critical indicator of financial health, showing that a company is capable of meeting its obligations, reinvesting in its operations, and paying dividends.
Quick assets, also known as liquid assets, are cash and other assets that can be quickly converted into cash without significant loss of value. They are crucial in assessing the short-term liquidity and financial health of a business.
Sales revenue is the income generated from the sale of goods or services by a company. It is a key determinant of a company's financial health, and it is crucial for assessing growth potential and earning assessments.
Shareholders' equity represents the owners' claim after subtracting total liabilities from total assets. It is a crucial metric for understanding a company’s financial health and includes components like share capital and reserves.
Solvency refers to the ability of an individual or an organization to meet its long-term financial obligations and continue its operations in the future. Specifically, solvency can represent a financial state where a person or company can pay their debts as they come due, or the extent to which a bank's assets exceed its liabilities.
In accounting, the Statement of Financial Position is an important financial statement that provides a snapshot of a company's financial health at a specific point in time. It is often referred to as a balance sheet and is critical for understanding the assets, liabilities, and equity of a business.
Times Fixed Charge is a measure of a company's ability to meet its fixed financial obligations, commonly evaluated through the Fixed-Charge Coverage Ratio.
Undercapitalization refers to the state of a company that lacks sufficient capital or reserves for its operational needs, often due to rapid growth. This situation can result in a profitable company struggling to convert earnings into cash to pay its debts.
Working capital is essential for financing the day-to-day operations of a company, calculated as the difference between current assets and current liabilities.
The working capital ratio, also known as the current ratio, measures a company's ability to pay off its short-term liabilities with its short-term assets. It is a key indicator of financial health and efficiency.
The Z-Score is a multivariate formula developed by Edward I. Altman in 1968 that measures the likelihood of business failure using multiple discriminant analysis. The UK variant was introduced by Richard J. Taffler in 1983.
