Z-Score Creator Altman Builds Model for Small Business Defaults
- Wiserfunding predicts 12-month default probability for SMEs
- Models cover 19 countries and are about 90 percent accurate
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Edward Altman, who created the Z-score method for predicting bankruptcies 50 years ago, has built on the model to assess creditworthiness of small- and medium-sized enterprises.
Together with Gabriele Sabato, previously head of risk appetite decisioning at Royal Bank of Scotland Group Plc, Altman founded London-based Wiserfunding Ltd. to calculate the 12-month default probability for businesses with less than 150 million euros ($168 million) of revenue. Their methods cover 19 European countries and have correctly forecast whether a company would default or stay solvent in about 90 percent of cases, Altman said in a phone interview.