How is the Failure Score calculated?
D&B collects data from a variety of sources to assess failure scores. The four main factors that influence the outcome are: • ‘Demographic’ information, including the company’s line of business; the regions the company operates in; the company’s maturity (older companies having lower risk of failure); parent company; and ‘negative public information’ (eg County Court Judgements, discussed below). • Characteristics of senior employees (average age is used as a proxy for experience) and associated businesses. • Trade payments, especially where these regularly go over 90 days or there is an adverse trend. • Financial information, including age of most recent balance sheet; a measure of solvency; profit margin and retained earnings. Although a parent company’s status can affect a subsidiary company’s failure score, D&B will not take into account guarantees provided by the parent to its subsidiary, or a subsidiary’s pension scheme, in assessing the subsidiary’s failure score. However, the P
