Safeguarding retirement through proactive risk assessment.
With $2.1 million already in retirement accounts and three children nearing college age, the Johnsons needed to minimize risk and maximize returns. They held $100,000 in shares of 'TechForward Inc.', a company that had shown impressive growth but whose long-term financial health was uncertain. A significant downturn in TechForward could jeopardize their college savings and retirement timeline.
Using the Altman Z-Score Calculator, Golden Door Asset's advisor determined that TechForward had a Z-Score of 1.18, indicating a moderate to high risk of bankruptcy within the next two years. This prompted a discussion about reallocating $100,000 to a lower-risk investment, projecting a potential prevention of $12,000 loss, using a conservative estimate that the TechForward investment would lose at least 12% in value if bankruptcy were imminent, as well as protecting their overall portfolio health.
The Altman Z-Score was calculated using TechForward's publicly available financial statements, including working capital, total assets, retained earnings, earnings before interest and taxes, sales, and total liabilities. The Debt-to-Asset Ratio Calculator provided additional context on the company's leverage.
$12,000 in potential losses avoided, plus increased confidence in long-term financial security.
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