Engine failure: the bankruptcy of Briggs & Stratton Corporation was an event long suspected by CreditRiskMonitor subscribers who watched the company's fledgling FRISK® score on a daily basis.
The Wisconsin-based company, who we highlighted with a High Risk Report in spring of 2020, bills itself as the world's largest manufacturer of small gas engines. “Over the past several months, we have explored multiple options with our advisors to strengthen our financial position and flexibility,” said Todd Teske, company CEO. “The challenges we have faced during the COVID-19 pandemic have made reorganization the difficult but necessary and appropriate path forward to secure our business.”
While the coronavirus certainly provided the final push into Chapter 11, our subscribers would have noted that the company was a big-time risk dating back six months before the pandemic began. Highly leveraged, the company had sunk deep into the FRISK® score "red zone" of heightened bankruptcy risk at the end of summer 2019:
The proprietary CreditRiskMonitor FRISK® score is proven 96% accurate in predicting bankruptcy risk in public companies with a 12-month forward-looking horizon. More than 35% of the Fortune 1000 rely upon our company to stay ahead of this risk day in and day out.
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Our FRISK® score model incorporates four powerful risk inputs:
- “Merton”-type model of stock market capitalization and volatility
- Financial ratios, including those used in the Altman Z”-Score Model
- Bond agency ratings from Fitch, Moody's, and DBRS Morningstar
- Website click pattern data from CreditRiskMonitor® subscribers, representing key credit decision-makers at nearly 40% of current Fortune 1000 companies plus thousands of other large companies worldwide
Since the start of 2017, the FRISK® score’s rate of success in capturing public company bankruptcy is 96%. In any given year, you can count on one hand the times we miss – and in those outlier cases, the circumstances deal with unusual, unforeseen events such as natural disasters and CEO fraud.
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About Bankruptcy Case Studies
CreditRiskMonitor® Bankruptcy Case Studies provide post-filing analyses of public company bankruptcies. Our case studies educate subscribers about methods they can apply to assess bankruptcy risk using our proprietary FRISK® score, robust financial database, and timely news alerts.
In nearly every case, a low FRISK® score gave our subscribers early warning of financial distress within a one-year time horizon. Our proprietary FRISK® score predicts bankruptcy risk at public companies with 96% accuracy. The score is formulated by a number of indicators including stock market capitalization and volatility, financial ratios, bond agency ratings from Moody’s, Fitch and DBRS, and crowdsourced behavioral data from a subscriber group that includes nearly 40% of the Fortune 1000 and thousands more worldwide.
Whether you are new to credit analysis or have decades of experience under your belt, CreditRiskMonitor® Bankruptcy Case Studies offer unique insights into the business and financial decline that precedes bankruptcy.