Category: P&L simulation
Stochastic Balance Simulation
We know that forecasts based on average values are on average wrong. In addition deterministic models will miss the important dimension of uncertainty – that gives both the different risks facing the company and the opportunities they produce.
View Post
The Case of Enterprise Risk Management
Traditionally, when estimating costs, project value, equity value or budgeting, one number is generated – a single point estimate.
View Post
A short presentation of S@R
Most companies have some sort of model describing the company’s operations – but…
The Probability of Bankruptcy
A good metric should have a low probability of rejecting a true hypothesis of bankruptcy (false positive) and a high probability of rejecting a false hypothesis of bankruptcy (false negative).
Predicting Bankruptcy
The Z-score is not intended to predict when a firm will file a formal declaration of bankruptcy in a district court. It is instead a measure of how closely a firm resembles other firms that have filed for bankruptcy.
The Risk of Bankruptcy
There are several models in use for predicting bankruptcy and we have in our balance simulation model implemented two; Altman’s Z-score model and the risk index Z developed by Hannan and Hanweck.
