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Here's why the Bp share price might be in serious trouble

Paying attention to a few simple checklists can radically improve our risk management. One of these - the Altman Z-Score - was found to be:

  • 72% accurate in predicting bankruptcy two years prior to the event in its initial test

  • 80-90% accurate in predicting bankruptcy one year before the event in the 31 years up until 1999

The Z-Score measures how closely a firm resembles other firms that have filed for bankruptcy by considering the following areas:

  • Current assets as a proportion of total assets,

  • Cumulative profitability and use of leverage,

  • Productivity of assets, and

  • Firm value compared to liabilities

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A Z-Score of more than 2.99 is considered to be a safe company. Those with a Z-Score of less than 1.8, on the other hand, have been shown to have a significant risk of financial distress within two years. We can see the checklist in action by applying it to a listed company. Take Bp (LON:BP.), for example.

How does Bp fare against Altman’s influential checklist?

GET MORE DATA-DRIVEN INSIGHTS INTO LON:BP. »

What does the Altman Z-Score flag up about Bp?

Bp gets a Z-Score of 0.57, indicating that caution should be taken when considering this stock. To view our full analysis of BP's Altman Score, please review its StockReport here with a free trial on us.


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The problem areas for Bp identified here can be explored in more depth on Stockopedia's research platform. All the best investors have stringent due diligence processes that reduce the chances of them suffering big losses, so why not take a leaf out of their book?

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