CHS Electronics Inc. (NYSE:HS)
-------------------------------------------------------
Analysis: Altman Bankruptcy Predictor
Company Name: CHS Electronics Inc.
Ticker Symbol: NYSE:HS
Date of Analysis: 3/17/99
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
-------------------------------------------------
Financial Summary, USD thousands (1,2,3) 12/31/98
-------------------------------------------------
Working Capital, WC 385.0
Retained Earnings, RE 155.3
Earnings B4 Interest & Taxes, EBIT 180.0
Market Value of Equity, MVE 874.0
Book Value of Tot. Liab., BVTL 1,301.1
Total Sales, TS 8,545.8
Total Assets, TA 3,574.2
-------------------------------------------------
Altman's Financial Ratios 12/31/98
-------------------------------------------------
X1 = WC/TA 0.11
X2 = RE/TA 0.04
X3 = EBIT/TA 0.05
X4 = MVE/BVTL 0.67
X5 = TS/TA 2.39
-------------------------------------------------
Bankruptcy Predictor Index, Z (4) 3.15
-------------------------------------------------
Company Health Assessment (5,6,7) Strong
-------------------------------------------------
Footnotes:
----------
1. Data obtained from unaudited YE1998 results reported
in the 2/24/99 press release.
biz.yahoo.com
2. Important quote from the 2/24/99 press release:
"The Company stated that in coordination with its
auditors, it is in the process of conducting an
analysis of vendor incentives due the Company for
the fourth quarter and year ended 1998. Reported
earnings for the fourth quarter and year ended 1998
are preliminary and subject to the Company's
completion of this analysis. This analysis is being
conducted in response to recently discovered
discrepancies related to the amount of incentives
recorded. The net earnings figures reported are
based upon the portion of the analysis that has been
completed. Subject to full and satisfactory
completion of the analysis, earnings for 1998 may be
higher than reported today. The Company stated that
it expects to report final audited results no later
than the week of March 15, 1999."
3. The Altman Bankruptcy Predictor analysis cannot
possibly account for the aforementioned discrepancies
outlined in Item 2 above. Therefore, the analysis
should be revised once the final audited results are
reported.
4. Bankruptcy Predictor Index:
Z = (1.2*X1)+(1.4*X2)+(3.3*X3)+(0.6*X4)+(1.0*X5)
5. Company Health Assessment:
Z > 3.0 = Strong
1.8 < Z < 3.0 = In Danger
Z < 1.8 = Near Death
6. 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.
7. 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. |
