Is Dp Eurasia Nv (LON:DPEU)'s weak balance sheet cause for concern?

Paying attention to a few simple checklists can radically improve our risk management. One of these - the Altman Z-Score - was found to be:

• 72% accurate in predicting bankruptcy two years prior to the event in its initial test
• 80-90% accurate in predicting bankruptcy one year before the event in the 31 years up until 1999

The Z-Score measures how closely a firm resembles other firms that have filed for bankruptcy by considering the following areas:

• Current assets as a proportion of total assets,
• Cumulative profitability and use of leverage,
• Productivity of assets, and
• Firm value compared to liabilities

A Z-Score of more than 2.99 is considered to be a safe company. Those with a Z-Score of less than 1.8, on the other hand, have been shown to have a significant risk of financial distress within two years. We can see the checklist in action by applying it to a listed company. Take small cap Dp Eurasia Nv (LON:DPEU), for example.

How does Dp Eurasia Nv fare against Altman’s influential checklist?

What does the Altman Z-Score flag up about Dp Eurasia Nv (LON:DPEU)?

Dp Eurasia Nv gets Z-Score of 1.43, indicating that caution should be taken when considering this stock.

It is worth noting that the check LON:DPEU fails is also the least significant of the factors that go into making up the Z-Score. Of more concern right now is how the Turkish economy fares, having recently entered into a recession.

Next Steps

To find more stocks like DP Eurasia NV, you'll need to equip yourself with professional-grade data and screening tools to pinpoint the highest quality companies in the market. This kind of information has traditionally been closely guarded by professional fund managers. But our team of financial analysts have carefully constructed this screen - which gives you everything you need.

In less than a minute, you can be exploring a list of stocks with the very strongest financial ratios in the market. You'll be joining us on a journey towards owning the very best quality stocks possible. So what are you waiting for? Come and get started for free.