User:Brune42

Probability of Distress (PoD)
The Probability of Distress (PoD®) is the [|probability] that a company will experience |Distress Event within 1 year, expressed as a percentage. Financial distress is defined as failure, reconstruction*, or some other indicative event (for example, filing for |Chapter 11 protection).

The derivation of a company’s PoD® incorporates:

-	 the company’s |H-Score (a measure of the extent to which it resembles companies which subsequently failed),

-	 the overall rate of distress across the full population of companies,

-	 the historical rate of distress at each point on the |H-Score scale,

-	 economic indicators such as the growth in |GDP.


 * Reconstruction is identified for any |company that, from a level of weakness (low |H-Score), has reduced either its |current liabilities or its |total liabilities by more than 30% with one or more of the following actions:

-  Capital injection: an increase in |net worth of more than 50% -  Rescheduling of more than half of |short-term debt -  Disposal of more than 30% of |fixed assets.

The PoD® has been developed by the financial health monitoring organisation Company Watch, based in London, UK.

Category:Finance Category:Financial ratios Category:Bankruptcy