Parker Drilling Company (NYSE:PKD)
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Analysis: Altman Bankruptcy Predictor
Company Name: Parker Drilling Company
Ticker Symbol: NYSE:PKD
Date of Analysis: 3/7/99
Conducted by: Samuel M. Williams
Vice President
Turnaround & Crisis Management, Inc.
Two Mid America Plaza, Suite 714
Oakbrook Terrace, IL 60181
Tel: 630-990-9718
Fax: 630-990-9693
E-mail: sam@turnrnd.com
turnrnd.com
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Financial Summary (1) 8/31/94 8/31/95 8/31/96 8/31/97 8/31/98 8/31/99e
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Working Capital, WC (1) 40.7 56.0 102.9 275.2 86.7 50.7
Retained Earnings, RE (1) (28.3) (24.4) (20.3) (4.0) 24.1 9.4
Earnings B4 Interest & Taxes, EBIT (1) (26.9) 7.2 10.2 56.4 93.9 1.6
Market Value of Equity, MVE (1,2) 294.0 303.5 381.3 1,071.7 369.1 246.1
Book Value of Tot. Liab., BVTL (1) 25.5 30.0 31.9 635.4 822.6 704.3
Total Sales, TS (1) 152.4 157.4 156.7 311.6 481.2 410.2
Total Assets, TA (1) 209.4 217.0 276.0 984.1 1,200.5 1,179.6
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Altman's Financial Ratios 8/31/94 8/31/95 8/31/96 8/31/97 8/31/98 8/31/99e
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X1 = WC/TA 0.19 0.26 0.37 0.28 0.07 0.04
X2 = RE/TA (0.14) (0.11) (0.07) (0.00) 0.02 0.01
X3 = EBIT/TA (0.13) 0.03 0.04 0.06 0.08 0.00
X4 = MVE/BVTL 11.52 10.10 11.95 1.69 0.45 0.35
X5 = TS/TA 0.73 0.73 0.57 0.32 0.40 0.35
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Bankruptcy Predictor Index, Z (3) 7.26 7.05 8.20 1.85 1.04 0.62
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Company Health Assessment (4,5,6) Strong Strong Strong In Near Near
Danger Death Death
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Footnotes:
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1. 8/31/99e figures are estimates based upon actual results from the 12/31/98 Form 10Q (4-month
transition period), and annualized for a 12-month period, where applicable (e.g., EBIT &
Total Sales).
2. MVE was estimated based upon aggregate value of shares held by non-affiliates on September
30th as reported on Form 10K's.
3. Bankruptcy Predictor Index: Z = (1.2*X1)+(1.4*X2)+(3.3*X3)+(0.6*X4)+(1.0*X5)
4. Company Health Assessment:
-- Z > 3.0 = Strong
-- 1.8 < Z < 3.0 = In Danger
-- Z < 1.8 = Near Death
5. The Altman Bankruptcy Predictor is widely used in the turnaround industry to assess and
predict a company's short-term survival prospects. The model is named after the renowned
Edward I. Altman, Max L. Heine Professor of Finance at New York University's Stern School
of Business, who published the initial research back in 1968. According to one scholarly
journal, Altman's Bankruptcy Predictor has proven consistently accurate over the period of
time since its development. The original samples in Altman's research displayed accuracy
of 95 percent based on data from approximately one year prior to failure. The accuracy
dropped to 72 percent based on two-year data. Subsequent tests on firms that have gone
bankrupt since 1968 have shown an accuracy level of 82 to 85 percent.
6. CAUTION!!! This analysis should only be used as an analytical tool. While it can greatly
assist an investor or stakeholder in identifying weak companies for further investigation,
it should not be used to the exclusion of other types of experienced and informed personal
evaluation techniques. Also, please remember that, when using the Bankruptcy Predictor
Model, the recent trend is the most important indicator of future success or failure since
companies' fortunes rarely turn on a dime. |
