Rebuilding a Credit Ratings Model during a Recession

Knowles, David
April 2011
Credit Control;2011, Vol. 32 Issue 3/4, p31
Trade Publication
The article presents a study by Creditsafe Business Solutions Ltd. which reviews its historic data on solvent and insolvent companies to develop common indicators of insolvency and to establish importance in predicting insolvency. The study used morphing and credit ratings model, balance sheets, and credit scorecards. Results showed that a company with a score between 1 and 2 has a 40% chance of being insolvent, while a company with a score of 69 or over has just a 6% chance of insolvency.


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