What is the Springate score?
The Springate score is one of the well-known bankruptcy prediction models, which is developed on the basis of the Altman model. In the process of developing a model of the 19 financial ratios that were considered the best, Springate selected four coefficients, based on which the model was built.
Springate score = 1.03A + 3.07B + .66C + .4D
- A = Working capital / Total assets
- B = EBIT / Total assets
- C = Profit before tax / Current liabilities
- D = Revenue / Total assets
What does the Springate score mean?
If the value of this ratio is greater than 0.862, the analyzed company is in a stable state. If the value is less than 0.862, it means the company might be under financial stress.