It is a big question for any investor at the time of investment, whether he is investing in solvent company or not? To ensure financial stability of the company investor may look at some financial ratios like profitability ratios, liquidity ratios etc. The trouble is, each ratio is unique and tells a different story about a firm's financial health. Here we have demonstrated a financial measure that checks the company’s financial solvency by just a one figure i.e. “Z-Score”. It is a statistical measure that quantifies the distance of data point from the mean of a data set. In a more financial sense, Z-score is the output from a credit-strength test that measures the likelihood of bankruptcy. A Z-score of 0 is equal to a 50% probability of bankruptcy and the higher the number refers good financial condition and vice versa.
Negative “Z Score” Companies
· Here below we have screened out list of the company which has "Z-Score" between zero to one. We can further look to the company’s financial and profitability condition before investing in this companies. Some of below listed companies have gone for debt restructuring.
· Here, we are providing the list of the companies which are quite solvent and we can park our investment in these companies. For this purpose, we have also applied screening measure on our total list of companies, to find refined list. The measures we have applied are market cap greater than 500 Cr, having dividend yield of more than 3% and whose Net Block is greater than its Total Debt. So we believe, these companies have potential to be solvent in critical slow down of the economy situation.
