Distribution of Italian companies Leanus Score?
Below is the distribution by Leanus Score of all the Italian companies that for at least one year had recorded revenues of more than 500.000 euros.
The Leanus Score is a proprietary indicator that measures the degree of risk associated with an accounting situation both annual and interim of companies or partnerships. The Leanus Score algorithm has been designed to take into account peculiarities of the Italian business system.
The Leanus Score algorithm is the exclusive property of Leanus and therefore cannot be disseminated.
Despite this, Leanus explained the general criteria by which it was developed. In fact, the main indicators that contribute to the determination of the score are indicated in the Balance Sheet Indices menu.
Compared to traditional scores, Leanus also takes into account the reclassification model; therefore one modification of the reclassification criteria may determine a change, even significant, in the Score.
The score algorithm, which was recently enhanced, was tested by carrying out a complex back-testing operation on the financial statements of one, two and three years prior to the defaults recorded in recent years.
The Leanus score is calculated for each accounting period of each company together with the Economic, Equity and Financial profile.
The numerical value of the Leanus Score does not express a PD (Probability of Default) but a organization of companies by decreasing risk profiles as the value of the score increases. In other words, through the Leanus Score it is possible to determine whether a company presents greater or lesser risks than another but not to what extent. The methodological choice derives from the consideration that it is possible to carry out statistical and probabilistic evaluations only on groups or portfolios of companies and not on individual positions.
The graph at the top of the page shows the distribution of companies with Revenues> 500.000 (for at least one financial year) by Leanus Score.
How is the Leanus Score interpreted?
The Leanus Score is represented through colors RED, YELLOW e GREEN.
- The maximum value is “+30” and indicates the highest level of reliability
- Values above 3 indicate a perfect state of economic, patrimonial and financial balance - color GREEN
- Values between 1.8 and 3 indicate a situation of dubious interpretation requiring caution and imposes the need for further investigation - color YELLOW
- Values under the 1.8 indicate a state of precarious balance - color RED
- Even values -30, indicate the reduction of the share capital.
- The minimum value is -40 and in addition to corresponding to the highest degree of risk, indicates that the shareholders' equity has been fully written off and is negative.
The highest levels "GREENS”Indicate the highest degree of reliability
The lowest levels "ROSSI”(Negative, very negative, very bad, probable default) indicate the highest degree of risk.
How is the Leanus Score calculated?
The Leanus Score is calculated in real time on any accounting situation, whether annual or interim, as well as on an aggregate of companies, on classes or on any sector. The Leanus Score is also processed on economic, equity and financial projections (Business Plans).
The Leanus Score is being used by Banks and professionals for assess the risk profile independently compared to traditional valuation systems based mainly on statistical criteria and less attentive to the critical elements that can be detected by a careful analysis of the accounting situations over time.
What is different about the Leanus Score compared to the other risk indicators?
The Leanus Score aims to distinguish clearly the companies to invest in in the commercial phase by companies that require a very high level of attention as they show clear signs of financial tension or economic / patrimonial difficulties.
In the Groups module it is possible to obtain the distribution of the companies belonging to the group by Leanus Score; this function is extremely valuable for the analysis of portfolios (Credit Monitoring, NPL, NPE etc.)
Post your feedback on this topic.