Altman Z-score

The Altman Z-Score is a quantitative balance-sheet method of determining a company’s financial health. “Safe” companies, i.e. companies that have a low probability of bankruptcy, have an Altman Z-Score greater than 3.0.The Altman Z-Score is a measure of a company’s health and likelihood of bankruptcy. Several key ratios are used in the formulation of an Altman Z-Score Value.The Z-score formula for predicting bankruptcy was published in 1968 by Edward I. Altman, who was, at the time, an Assistant Professor of Finance at New York University. The formula may be used to predict the probability that a firm will go into bankruptcy within two years. Z-scores are used to predict corporate defaults and an easy-to-calculate control measure for the financial distress status of companies in academic studies. The Z-score uses multiple corporate income and balance sheet values to measure the financial health of a company.The Z-score is a linear combination of four or five common business ratios, weighted by coefficients. The coefficients were estimated by identifying a set of firms which had declared bankruptcy and then collecting a matched sample of firms which had survived, with matching by industry and approximate size (assets).Altman applied the statistical method of discriminant analysis to a dataset of publicly held manufacturers. The estimation was originally based on data from publicly held manufacturers, but has since been re-estimated based on other datasets for private manufacturing, non-manufacturing and service companies.Generally speaking, the lower the score, the higher the odds of bankruptcy. Companies with Z-Scores above 3 are considered to be healthy and, therefore, unlikely to enter bankruptcy. The Z-Score model is the 1960′s brainchild of Professor Edward Altman of NYU.For Public Companies, the Model is calculated as follows: Z = 1.2*X1 + 1.4*X2 + 3.3*X3 + 0.6*X4 + 1.0*X5.There are 5 variables: X1 = (Working Capital/Total Assets). X2 = (Retained Earnings/Total Assets). X3 = (EBITDA/Total Assets). X4 = (Market Value of Equity/Total Liabilities). X5 = (Net Sales/Total Assets).

Sinking fund

A fund into which a company sets aside money over time, in order to retire its preferred stock, bonds or debentures. A fund into which a company sets aside money over time, in order to retire its preferred stock, bonds or debentures. In the case of bonds, incremental payments into the sinking fund can soften the financial impact at maturity. Investors prefer bonds and debentures backed by sinking funds because there is less risk of a default.A sinking fund is a fund established by a government agency or business for the purpose of reducing debt by repaying or purchasing outstanding loans and securities held against the entity. It helps keep the borrower liquid so it can repay the bondholder.Rather than the issuer repaying the entire principal of a bond issue on the maturity date, another company buys back a portion of the issue annually and usually at a fixed par value or at the current market value of the bonds, whichever is less. Should interest rates decline following a bond issue, sinking-fund provisions allow a firm to lessen the interest rate risk of its bonds as it essentially replaces a portion of existing debt with lower-yielding bonds.From the investor's point of view, a sinking fund adds safety to a corporate bond issue: with it, the issuing company is less likely to default on the repayment of the remaining principal upon maturity since the amount of the final repayment is substantially less. This added safety affects the interest rate at which the company is able to offer bonds in the marketplace.

National Income Accounting

A term used in economics to refer to the bookkeeping system that a national government uses to measure the level of the country's economic activity in a given time period. National income accounting records the level of activity in accounts such as total revenues earned by domestic corporations, wages paid to foreign and domestic workers, and the amount spent on sales and income taxes by corporations and individuals residing in the country.National income accounting provides economists and statisticians with detailed information that can be used to track the health of an economy and to forecast future growth and development. Although national income accounting is not an exact science, it provides useful insight into how well an economy is functioning, and where monies are being generated and spent.Some of the metrics calculated by using national income accounting include gross domestic product (GDP), gross national product (GNP) and gross national income (GNI).

Zero Hedge

Zero Hedge is an American financial blog. It reports on Wall Street and the financial sector and is credited with bringing the controversial practice of flash trading to public attention in 2009 via a series of posts alleging that Goldman Sachs' access to flash order information allowed the firm to gain unfair profits. The blog is written by a group of people who write under the pseudonym "Tyler Durden". Though derided by the mainstream press as being fraught with conspiracy theories, the blog grew quickly and has been called a "blog sensation".

Johari Window model

The Johari Window model is a simple and useful tool for illustrating and improving self-awareness, and mutual understanding between individuals within a group. The Johari Window model can also be used to assess and improve a group's relationship with other groupsThe Johari window is a technique created by Joseph Luft and Harry Ingham in 1955 in the United States, used to help people better understand their mental instability. It is used primarily in self-help groups and corporate settings as a heuristic exercise.When performing the exercise, subjects are given a list of 56 adjectives and pick five or six that they feel describe their own personality. Peers of the subject are then given the same list, and each pick five or six adjectives that describe the subject. These adjectives are then mapped onto a grid.

Entrepreneur

One who creates a new business in the face of risk and uncertainty for the purpose of achieving profit and growth by identifying opportunities and assembling the necessary resources to capitalize on them. Main Characteristics of Entrepreneurs are Desire for responsibility,Preference for moderate risk,Confidence in their ability to succeed,Desire for immediate feedback,High level of energy,Future orientation,Skilled at organizing,Value achievement over money

Six Sigma

Six Sigma stands for Six Standard Deviations (Sigma is the Greek letter used to represent standard deviation in statistics) from mean. Six Sigma methodology provides the techniques and tools to improve the capability and reduce the defects in any process.Six Sigma is a business management strategy, originally developed by Motorola in 1986.Six Sigma seeks to improve the quality of process outputs by identifying and removing the causes of defects (errors) and minimizing variability in manufacturing and business processes.Six Sigma is a systematical process of “quality improvement through the disciplined data-analyzing approach, and by improving the organizational process by eliminating the defects or the obstacles which prevents the organizations to reach the perfection”.The Six Sigma ensures the quality control, total quality management and zero defects.Customer requirements, design quality, metrics and measures, employee involvement and continuous improvement are main elements of Six Sigma Process Improvement. Through the implementation of the Six Sigma it is made sure that the goals are set on the improvement of all processes to reach the level of better quality. “The Six Sigma” shows the organization’s ability of highly capable processing in producing the outputs within the limited specifications. There fore it can be said that the processes that operates with the Six Sigma quality, is able to produce a quality products at a low rate of defects.When a process attains the certification of Six Sigma quality, it is clear that the organization has attained the standard deviations form the means of the production till the specific limitations, and so can make sure that there is no room for the items to fail to meet the specifications. Altogether we can consider the Six Sigma as the professionalizing of the quality management functions.ProjectsIndia is a training and consultancy organisation established in the year 2002 to train personnel in Lean manufacturing and Six Sigma improvement methodologies. The training programs have been conducted around the world in countries such as U.K, CHINA,INDIA,DUBAI,SPAIN ,SOUDIARABIA and JORDAN.