Two filters need to be achieved to qualify as a zombie. One interest coverage less than one for three years and two Z-scores less than zero. If they qualify for both, we call them zombies. The United States that may surprise some people actually has over the years had higher zombie ratios. Back in 1990, only one and a half percent of global companies qualified as zombies. Today, it's about 7% as I said. Now let's move to how common they are, if that's okay, and we'll thought with the United States.
In this week’s Primary View podcast, Dr. Edward Altman, the legendary bankruptcy expert, discusses the outlook for debt-saddled zombie companies with Reorg reporter Gaurav Sharma. The New York University professor, best known for the Z-Score formula, cautions that bankruptcy cases are likely to increase in 2024-25, even if the U.S. avoids a recession.
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