Corporate Financial Distress, Restructuring, and Bankruptcy, 4th Edition
by Edward I. Altman, Edith Hotchkiss, Wei Wang
CHAPTER 11Applications of Distress Prediction Models: By External Analysts
In Chapter 10, we discussed the evolution of the Z‐Score model, and other distress prediction techniques, and included a list of applications of the models. Figure 11.1 shows that list again. In the next three chapters, we revisit this applications subject, elaborating on many of suggested, or already experienced, applications, including several that were not discussed earlier. This first chapter concentrates on those applications performed by analysts who are external to the distressed debtor (left‐hand column of Figure 11.1) in order to improve their position or to exploit profitable opportunities presented by distressed firms and their securities. Chapter 12 explores in greater depth, via a case study, the unique application related to managerial efforts for formulating and implementing a turnaround strategy. And in Chapter 13, we apply our updated distress prediction model, called Z‐Metrics™, in a “bottom‐up” analysis of the default assessment of sovereign debt.
| External (to the Firm) Analytics | Internal (to the Firm) and Research Analytics |
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