1.
Accounting liquidity
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In accounting, liquidity is a measure of the ability of a debtor to pay their debts as and when they fall due. It is usually expressed as a ratio or a percentage of current liabilities, Liquidity is the ability to pay short-term obligations. For a corporation with a balance sheet there are various ratios used to calculate a measure of liquidity. These include the following, The current ratio is the simplest measure, a value of over 100% is normal in a non-banking corporation. However, some current assets are difficult to sell at full value in a hurry. This indicates the ability to service current debt from current income, for different industries and differing legal systems the use of differing ratios and results would be appropriate. For instance, in a country with a system that gives a slow or uncertain result a higher level of liquidity would be appropriate to cover the uncertainty related to the valuation of assets. A manufacturer with stable cash flows may find a quick ratio more appropriate than an Internet-based start-up corporation. Liquidity is a concern in a banking environment and a shortage of liquidity has often been a trigger for bank failures. Holding assets in a liquid form tends to reduce the income from that asset so banks will try to reduce liquid assets as far as possible. However, a bank without sufficient liquidity to meet the demands of their depositors risks experiencing a bank run, the result is that most banks now try to forecast their liquidity requirements and maintain emergency standby credit lines at other banks. Banking regulators also view liquidity as a major concern, financial ratio Going concern Liquidity forecast Solvency

2.
Accounting rate of return
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Accounting rate of return, also known as the Average rate of return, or ARR is a financial ratio used in capital budgeting. The ratio does not take account the concept of time value of money. ARR calculates the return, generated from net income of the capital investment. The ARR is a percentage return, say, if ARR = 7%, then it means that the project is expected to earn seven cents out of each dollar invested. If the ARR is equal to or greater than the rate of return. If it is less than the rate, it should be rejected. When comparing investments, the higher the ARR, the more attractive the investment, over one-half of large firms calculate ARR when appraising projects. It ignores cash flow from investment, therefore, it can be affected by non-cash items such as bad debts and depreciation when calculating profits. The change of methods for depreciation can be manipulated and lead to higher profits and this technique does not adjust for the risk to long term forecasts. ARR doesnt take account the time value of money

3.
Altman Z-score
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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 a 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 health of a company. The Z-score is a combination of four or five common business ratios. Altman applied the method of discriminant analysis to a dataset of publicly held manufacturers. The original data sample consisted of 66 firms, half of which had filed for bankruptcy under Chapter 7, all businesses in the database were manufacturers, and small firms with assets of < $1 million were eliminated. The original Z-score formula was as follows, Z =1. 2X1 +1. 4X2 +3. 3X3 +0. 6X4 +1. 0X5, x1 = Working Capital / Total Assets. Measures liquid assets in relation to the size of the company, x2 = Retained Earnings / Total Assets. Measures profitability that reflects the age and earning power. X3 = Earnings Before Interest and Taxes / Total Assets, measures operating efficiency apart from tax and leveraging factors. It recognizes operating earnings as being important to long-term viability, x4 = Market Value of Equity / Book Value of Total Liabilities. Adds market dimension that can show up security price fluctuation as a red flag. X5 = Sales / Total Assets, standard measure for total asset turnover. Altman found that the profile for the bankrupt group fell at -0.25 avg. Altmans work built upon research by accounting researcher William Beaver and others, in the 1930s and on, Mervyn and others had collected matched samples and assessed that various accounting ratios appeared to be valuable in predicting bankruptcy. Altmans Z-score is a version of the discriminant analysis technique of R. A. Fisher. William Beavers work, published in 1966 and 1968, was the first to apply a statistical method, Beaver applied this method to evaluate the importance of each of several accounting ratios based on univariate analysis, using each accounting ratio one at a time