March 31, 2009
In perhaps one of the most rigorous academic research projects ever undertaken to test the validity and effectiveness of a wide universe of financial metrics, Carton and Hofer, 2006 make the following concluding remark, “Very few non-public companies monitor the change in their Altman’s Z-score. However, the findings of this research indicate that this is the single most powerful measure for monitoring shareholder returns for both annual and three year time frames. Since this is a survival measure that is also important to creditors, management should pay particular attention to this financial performance metric”. Indeed, it only makes sense that this important measure once again outperforms every metric that it is compared against for the Z-score touches nearly every critical dimension of financial performance. While leveraging the benefits of this important metric makes perfect sense, it is the notion of capturing its change that is most meaningful. This article examines the challenges associated with capturing change and puts forth one solution to help make the process of measuring change useful from a practical perspective.
January 28, 2009
This paper offers a fresh perspective from which to gauge the ongoing viability of a firm. While investors, lending institutions and trade creditors share common concern with respect to risk, they differ according to both the time horizon and their interest in the ongoing viability of the firm. Using a synthetic credit score and the time tested Altman’s Z-score, this paper presents both measures along a simple X, Y axis plot that aims to provide a perspective of risk that is both straightforward and intuitive.
January 1, 2009
Much can be done to improve the process of managing risk in the commercial lending environment. Recent advances in technology, continuous academic progress and a groundswell of practitioners motivated by the state of the economy create the ideal atmosphere for change. While pessimists remain paralyzed in the midst of what many refer to as the ‘perfect economic storm’, tomorrow’s leaders are busy retooling processes that will make them stronger and better able to compete. This paper puts forth one change-opportunity that vastly improves the commercial lender’s insight into loan-portfolio risk and opens the door to a new era of better risk management.
July 30, 2008
Providing transparent and accurate financial performance data to investors, partners and auditors is becoming increasingly important, if not critical for those engaged in the business of private equity and venture capital. In the recent past, this complex environment was tied together with a myriad of Excel® spreadsheets that served to aggregate, consolidate and report portfolio-company performance, making this task extraordinarily inefficient, costly and fraught with error. This paper will frame the problem in some detail and will offer several solutions designed to meet the needs of capital providers that seek to provide more accurate and consistent financial reporting to those that depend on it most.
