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Argentis A score model

Defects - In management 8 4 2 2 2 1 The chief executive is an autocrat He is also the chairman Passive board, an autocrat will see to that Unbalanced board too many engineers or too many finance types Weak finance director Poor management depth

Defects - In accountancy

3 3 3 15

No budgets or budgetary controls (to assess variances, etc.) No cash flow plans, or not updated No costing system. Cost and contribution of each product unknown Poor response to change, old fashioned product, obsolete factory, old directors, and out of date marketing

Total defects Mistakes

43 15 15 High leverage, firm could get into trouble by stroke of bad luck Overtrading. Company expanding faster than its funding. Capital base too small or unbalanced for the size and type of business Big project gone wrong. Any obligation which the company cannot meet if something goes wrong

Pass

10

15

Total mistakes Symptoms

45 4 4 Financial signs, such as Z score, appear near failure Creative accounting. Chief executive is the first to see signs of failure and, in an attempt to hide it from creditors and the banks, accounts are glossed over by, for instance, overvaluing stocks, using lower depreciation, etc. Skilled observers can spot these things Non-financial signs, such as untidy offices, frozen salaries, chief executive ill, high staff turnover, low morale, and rumours

Pass

15

Total symptoms Total score

12 100 Pass 25