PREDICTOR RATIOS Definition

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PREDICTOR RATIOS: Most ratios are descriptive in nature; that is, they describe the firm as it is now. As you might expect, Predictor Ratios provide suggestions about likely future conditions for the firm. VentureLine provides two industry standard Predictor Ratios:

  1. Altman Z-Score - a valid predictor or bankruptcy, and,
  2. Sustainable Growth Rate - shows the degree to which a concern can grow using their retained earnings to fund growth.

Learn new Accounting Terms

EARNINGS FROM OPERATIONS (EFO) represent earnings before other operating items less (i) depreciation and amortization plus (ii) other income less (iii) other expense.

FINANCIAL ANALYSIS is analysis of a companys financial statement, usually by accountants or financial analysts.

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