Vester, these are actually very good questions. The IDB monies, are these grants or loans? It will be interesting to carry on the Altman evaluation on both cases, but if these are grants, it will change the Z factor quite materially, if loans it will decrease the fourth element and increase the first by a little more (since I presume the IDB funds will become working Capital). As for the value of the patent portofolio, it is in the book one way or another, so Altman does not assign to these any value above the book value.
It might be actually interesting to "forecast" the Altman parameter at various annual sales level and rational profitability to see under what conditions the Z factor a, turns positive, b, gets above the critical 3.
Why don't you go therough the exercise and lets derive few rational models . That might be actually quite useful to get a measure of the sales and profit levels required, according to Altman, to get of the "endangered species" list.
Zeev |
