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Strategies & Market Trends : Bankruptcy Predictor Model

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To: Razorbak who wrote (65)	3/16/1999 1:08:00 AM
From: Mad2	Read Replies (2) of 477

>what do you think about Parker Drilling?< Not pretty! Good example of a very poorly (or just stupid) timed aquisition. I didn't look at their depreciation and how much of the Hercules buy went to goodwill, but they took on too much leverage at precisely the wronge time. Didn't those guy's know you buy low sell high. Too bad cause it's a bet gone bad. I think they'd need at least +20/barrell oil to rescue them and we know that ain't gona happen. I can see that the Altman indicator is a excellent tool for comparing companies in the same sector and applying it to a sector like oil drillers where the focus needs go beyond last quarters net income and P/E can help sort out issues of financial strength. You can also do what if visually ( like what if net income goes to zero) As you example of Parker shows the Altman Z is a good tool for companies growing through acquisitions/rollup's, measuring the net financial strength of acquired business. In the next few days I'll tackle the cable industry or oil drillers (have you done NE GLM FLC or RDC yet?) as I'm curious to see how the "Z" correlates with how the market has valued companies in the same sector. Mad2

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