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Strategies & Market Trends : Bankruptcy Predictor Model

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To: semi_infinite who wrote (295)4/3/1999 2:35:00 PM
From: Zeev Hed   of 477
 
Ray, I think that the Altman system tries to derive a measure of future survivability of a company based on past history and the way this past history affects a company balance sheet and income statement. It cannot predict future "bonanza", but it does take into account that exploiting such a bonanza requires financial resources.

Since I do not know how to predict a future bonanza either, I use the Altman relationships as part of an evaluation model that also includes technical analysis (very negative for AIPN right now) and to some extent an assessment of the potential for a future "bonanza". I look at a number of these all the time and right now, for instance, I prefer even HEC (well for a short time until the nature of future financing is evident). AIPN was also had a very bad case of a floorless issue which I am not sure if it fully played itself out.

Zeev
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