Scam Plays and DTC "Chilled" Stocks - Beware of Both

[DERBENSKI]

Javelin Play: Focus FCCN

Since ordering a report from D&B I have recieved two alerts.

The report alerts suggest that DR Gas is on the edge, and not the merger target that it is cracked up to be.

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Financial Stress Score
Financial Stress Score predicts the likelihood of business failure in the next 12 months.

You received this alert on: 11/1/2007. This alert will expire in 18 days. Print Alert | Delete Alert


As of 10/25/2007:
This company's Financial Stress Class improved from Class 4 to Class 3.
This company's Financial Stress Score (percentile) is 6 which is better than 5% of businesses in the D&B database.

FROM Class 4 TO Class 3

Learn more about the Financial Stress Score:
What is the Financial Stress Score?
What influences a company's Financial Stress Score?
How could this Score be used?

This Company was stored in view my reports/alerts of your account on 10/22/07. Financial Stress Class at that time is shown as the FROM above. As of 10/25/2007, Financial Stress Class has improved as shown in the TO above. This change is reflective at this point in time and the D&B report purchased today may reflect other changes since it is dynamically produced.

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D&B's Financial Stress Score
What is the Financial Stress Score?
How does D&B define Financial Stress?
What is the Financial Stress Scoring System?
What influences Company's Financial Stress Score?
How could the Financial Stress Score be used and for what purposes?
How can I improve my cash flow by instituting a credit policy?
What is the Financial Stress Score?
D&B's Financial Stress Score helps you predict a business's potential for failure. It is designed to predict the likelihood that a company will obtain legal relief from creditors or cease operations without paying all creditors in full over the next 12 months. The score uses the full range of D&B information, including financials, comparative financial ratios, payment trends, public filings, demographic data and more to determine the risk of doing business with your company.
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How does D&B define Financial Stress?
D&B created its Financial Stress scoring system to predict the likelihood that a company will experience financial stress based on the definition that a financially stressed company is one that:
Ceased operations following assignment or bankruptcy
Ceased operations with loss to creditors
Voluntarily withdrew from business operation leaving unpaid obligations
Is in receivership, reorganization, or has made an arrangement for the benefit of creditor


Note: Voluntary discontinuance involving no loss to creditors is not defined as financially stressed.
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What is the Financial Stress Scoring System?
The Financial Stress Score System classifies risk information in three ways:
A Class: The best choice for an at-a-glance risk assessment. The Class system segments the businesses in the D&B database into five distinct risk groups. The class indicates that this firm shares some of the same business and financial characteristics of other companies with this classification. It does not mean the firm will necessarily experience financial stress.
Class Scale: 1 to 5: (1 = Lowest Risk, 5 = highest risk)
A Percentile: A granular view providing a more specific classification of risk. The percentile shows you where a company falls among businesses in the D&B information base, and is most effectively used to rank order a portfolio from highest to lowest risk of business failure.
Percentile Scale: 1 to 100: (1 = Highest Risk, 100 = Lowest risk)
A Score: The most granular view providing a more specific classification of risk. The score provides a direct relationship between the score and the level of risk and enables more granular cutoffs typically used in a more automated decision-making process.
Score Scale: 1,001 to 1,875: (1,001 = Highest Risk, 1,875 = Lowest risk)
Financial Stress Class % of businesses within this Financial Stress Class Financial Stress Percentile Financial Stress Score
1 80% 21-100 1,377-1,875
2 10% 11-20 1,353-1,376
3 6% 5-10 1,303-1,352
4 3% 2-4 1,225-1,302
5 1% 1 1,001-1,224


What does it mean if a stress score is "Zero?" Financial Stress scores are not calculated for those businesses designated as "Discontinued at This Location," "Open Bankruptcy" or "Higher Risk ". These records are automatically assigned a score of zero (0).
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What influences a company's Financial Stress Score?
A company's Financial Stress Score reflects past payment performance, demographic and financial information, and outstanding suits and liens.


Here are some business attributes that are correlated with poor Financial Stress Scores:
Payment Behavior
Greater proportion of slow or negative payment experiences.
Lower PAYDEX scores.
Fewer satisfactory payment experiences.
More late payments collected from customers
Demographics
Greater prevalence of business or management problems.
Fewer years in business.
Small employee base size.
Fewer customers that own their premises
Industry
Public Records
Larger percentage of suits, liens and judgments
Financials
Low receivables, payables and cash.
Poor current liabilities, current assets, working capital.
Negative or low net worth
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How could the Financial Stress Score be used and for what purposes?
Potential business partners, banks and other financial institutions use the Financial Stress Score for various risk based decisions including:
Determining whether a company has the financial resources to handle an increased credit line.
Assessing whether a company will be around for the long term (as a customer or supplier).
Developing risk-based pricing requirements such as:
Interest rates
Insurance premiums
Credit limits and payment terms
Discounts
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How can I improve my cash flow by instituting a credit policy?
Many companies use credit policies to make decisions that will help them minimize the risks of doing business with other companies. Typically, credit policies are used as a set of guidelines for how a company should work with its customers and suppliers based on credit information. By using D&B information as part of a credit policy, you can:
Determine whether to extend credit terms or demand cash on delivery when providing goods or services to customers.
Choose reliable suppliers who are trustworthy and in good standing.
Evaluate and select customers according to their payment history when there is limited capacity to serve customers.
Focus sales and marketing resources on the most attractive prospects.

Creating a credit policy is as simple as building a step into your current processes for making credit decisions. For example, you can use D&B scores (like the Financial Stress Score) as a benchmark or limit.

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