Ohio-based chemical giant Hexion, Inc. has seen it's FRISK® score stay sunk at a bottom-dwelling "1" for more than two years, indicating tremendous potential bankruptcy risk.
Hexion's struggles are juxtaposed against a sea of competitors who are by and large financially healthy. The average probability of failure for SIC code 2821 (Plastics materials, synthetic resins and nonvulcanizable elastomers) reflects an industry subsector with low risk. Yet according to the FRISK® Stress Index, Hexion, Inc. is currently the only company at a "1," a mark which predicts a probability of bankruptcy of up to 50 percent between now and December 2019.
This High Risk Report will delve into all of the reasons why Hexion, Inc. should be on your radar if you haven't spotted them yet. Their inability to generate any positive return for years now, coupled with substantial negative tangible net worth, indicate a company that is in major financial trouble.
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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 High Risk Reports
Our High Risk Reports feature companies that are exhibiting a significantly high level of financial distress, as indicated by our proprietary FRISK® score.
The reports highlight the factors that have pushed a company's score lower on the "1" (worst) to "10" (best) FRISK® score, which is 96% accurate in predicting bankruptcy over a 12-month period. The High Risk Reports also includes analysis on financial indicators such as the company’s DBT index, stock performance, financial ratios and how it is performing relative to its industry peers.
The ultimate goal of the High Risk Report series is two-part: provide an early warning for those doing business with an increasingly distressed company and inform of the many signals that should be examined when assessing financial risks.