Most listed firms worse off, report saysSunday December 13, 2009, 4:38 pm -- jotter

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Date Posted: 05:40:11 12/13/09 Sun
Author: risk of failurebankruptcy prediction model
Subject:

Most listed firms worse off, report saysSunday December 13, 2009, 4:38 pm

Most listed firms worse off, report says

Sunday December 13, 2009, 4:38 pm

Most listed companies ended the financial year in worse financial shape compared with a year earlier, a report says.

The Australian Corporate Health Index report from specialist advisory firm 333 Consulting found 71 per cent of listed companies had gone backwards over the past financial year.

This was up from the 66 per cent result recorded in the previous year's index.

333 Consulting managing director Martyn Strickland said the impact of the financial crisis was not over for many companies.

"The results suggest that for these companies the impact of the downturn is deeper and longer than generally acknowledged and that the risk of failure is very real," Mr Strickland said in a statement.

The report covered about 200 companies listed on the Australian Securities Exchange excluding those in the financial services sector.

It found 32 per cent of companies were classified as "unhealthy", up from 25 per cent, while 32 per cent were at the risk of becoming unhealthy, up from 28 per cent.

The percentage of companies ranked healthy fell to 36 per cent, from 42 per cent.

The consumer sector had fared better than most "probably because it had been helped by the government stimulus package", the report said.

The report used a bankruptcy prediction model called the Altman Z Score, which examines a firm's capital assets, retained earnings, earnings before interest and tax, market value of equity and book value of debt and sales.

The median Z score fell 19 per cent to 2.42 in 2009, from 2.97. This was the largest drop in the 10-year history of the survey.

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