none Commercial Risk Manager

Commercial Risk Manager

Lending institutions and companies are required to determine the amount of risk involved with extending credit or loans to a customer.  Typically, a credit manager or loan officer would perform an evaluation using ratios, prior years' financial statements and statistical models such as,  Altman's Z Score.  Using XBRL tagged financial statements, a final version of the Commercial Risk Manager will recognize the required figures and calculate a z-score.  The resulting z-score will determine which companies will most likely go bankrupt or be safe to lend to.

In the future we would like to pull the XBRL tagged data, but for now, these are the tags which are needed for the Altman's Z Score Model:

            <group type="ci:statements.balanceSheet">

            <group type="ci:balanceSheet.assets">

            <group type="ci:assets.currentAssets">

                <label href="xpointer(..)" xml:lang="en">Total current assets</label>

<label href="xpointer(..)" xml:lang="en">Total assets</label>

<group type="ci:liabilities.currentLiabilities">

<label href="xpointer(..)" xml:lang="en">Total current liabilities</label>

<label href="xpointer(..)" xml:lang="en">Total liabilities</label>

<group type="ci:liabilitiesAndStockholdersEquity.stockholdersEquity">

<label href="xpointer(..)" xml:lang="en">Total stockholders' equity</label>

<group type="ci:statements.incomeStatement">

<group type="ci:stockholdersEquity.retainedEarnings">

<label href="xpointer(..)" xml:lang="en">Retained earnings</label>

<group type="ci:grossProfit.salesRevenueNet">

            <label href="xpointer(..)" xml:lang="en">Total revenues</label>

              

<group type="ci:incomeFromContinuingOperations.incomeBeforeTaxesAcctingChangesExtraordinaryItems">

<label href="xpointer(..)" xml:lang="en">Income before income taxes</label>

                            

 

     

        Altman's Z - Score Formula: 

       

                  Z= 0.012X1 + 0.014X2 + 0.033X3 + 0.06X4 +0.99X5

 

            X1= Working Capital / Total Assets

                    (Working Capital = Current Assets - Current Liablities)

            X2= Retained Earnings / Total Assets

            X3= Earnings before Interest & Taxes / Total Assets

            X4= Market Value of Equity / Book Value of Total Liabilities

            X5= Sales / Total Assets

 

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  Z-score calculation key:

       Z > 2.99    Automatically approved for the loan

        2.99>Z>1.81    Must be reviewed by a Loan Approval Official

        Z <1.81      Automatically denied for the loan

 

**For our project we will used Great Plains Financial Information:

    Current Assets:                  $148,904

    Total Assets:                       180,252

    Current Liabilities:                46,950

    Total Liabilities:                    47,059

    Retained Earnings:                14,518

    Market Value of Equity:      118,837

    Revenues:                            134,907

    Earnings before Taxes:          21,305