is a measure of the likelihood of company failure in the year
following the date of calculation. It is given as a number in the range
0 to 100. For ease of interpretation it may be considered as five bands
81-100 THE SECURE BAND - Many large and successful public companies, and
profitable companies with no borrowings, are in this band. Failure
is very unusual and normally occurs only as a result of exceptional
changes within the company or its market.
61-80 STABLE BAND - Here again company failure is a rare occurrence and
will only come about if there are major company or marketplace changes
41-60 NORMAL BAND - This sector contains many companies that do not
fail, but some that do.
21-40 CAUTION BAND - Here, as the name suggests there is a significant
risk of company failure: in fact, companies in this band are on
average, four times more likely to fail than those in the Normal Band.
01-20 HIGH RISK BAND - Companies in this sector may find it difficult
to continue trading unless significant remedial action is undertaken,
or there is support from a parent company, or special circumstances
apply. A low score does not mean that failure is inevitable.
QUI CREDIT SCORING
QUI uses sophisticated techniques to interpret raw data to give clear
indicators of financial stability and capacity.
The QUISCORE indicates the likelihood of company failure in the year
following the calculation, based on research and statistical analysis
that compares failed companies with those that have continued to trade.
The QUIRATING provides a yardstick to establish routine unsecured trade
credit limits. It is also useful for establishing the capacity of
suppliers.
For credit, purchasing and marketing management, these measures supply
invaluable aid to corporate health checking and monitoring.
A SKILLED PROGNOSIS
The statistical analysis required to arrive at reliable prognoses of
companies' on-going financial stability and capacity is both extensive
and subtle.
The Qui statistical work now incorporates ten years' experience in
identifying those factors that combine to produce the greatest
predictive power.
The modelling and research is continuously refined, updated and
interpreted by Qui's team of accountancy and statistical specialists.
This work reflects current economic conditions and regularly includes
post mortems on failed companies, in order to refine the practical
considerations that are included, within the models.
INTERPRETING THE QUISCORE
The QuiScore is based on statistical analysis of a random selection of
companies. It is intended to be an aid to the financial part of the
overall assessment and has to be considered in conjunction with other
relevant information, such as seasonal trends, product life cycles,
competition, interest rates and other micro- & macro-economic factors.
The stability of many companies is reliant on that of holding companies
or other associates. The Qui model assumes that such related
organisations are stable and will provide continuity of support, so
separate reports are required to confirm their status. A range of
reports is available to provide further information on the subject,
related concerns and markets.
Accounts information is taken from that filed at the Companies Registry
& is subject to the accounting policies chosen by the subject company.
Consolidated accounts reflect the total picture for a subject company
and its subsidiaries, so the QUISCORES based on consolidated figures
give the position for the group as a whole. Scores based on
unconsolidated accounts of companies with trading subsidiaries will
require further interpretation, as will scores of groups where there
have been acquisitions or disposals during the latest registered
financial period.
The subject's registration of full accounts, rather than taking the
exemptions for small and medium-sized companies, enhances the precision
of the calculation.
The QUISCORE has been developed to assess standard manufacturing and
distribution companies. Additional caution should be exercised when
using the score to assess companies in industries such as banking,
insurance and property development. Similarly, the assessment of large
public companies should include consideration of the current share
price, interim results and other widely publicised events.
is a yardstick to establish routine trade credit limits
for the average supplier.
The QUIRATING acts as a yardstick which assists the calculation of
credit limits for routine suppliers. The basic rating should be
modified to reflect factors such as your profit margins, stock levels,
ability to bear losses and other factors specific to individual users.
The QUIRATING can also be used by purchasers of goods and services as a
yardstick for establishing the monthly rate of purchase from suppliers.
QUIRATINGS based on consolidated figures give the position for the group
as a whole.
The maximum QUIRATING displayed is £100,000. Higher credit limits may be
feasible, but normally only after further research. Similarly, setting
limits above £25,000 should normally be based on additional information.
FOREWARNED IS FOREARMED
Assessing the overall financial health of a company is a complex
operation: it entails not only consideration of the subject company, its
competitiveness and financial, physical and human resources, but also
the trends in its market sector and in the economy as a whole. All these
factors are subject to continual change, so on-going clients, suppliers
and other trading partners should be monitored.