Talisman Energy (NYSE:TLM)
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Analysis: Altman Bankruptcy Predictor
Company Name: Talisman Energy
Ticker Symbol: NYSE:TLM
Date of Analysis: 5/4/99
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, C$ Millions (1) 12/31/97A 12/31/98A 03/31/99Q
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Working Capital, WC (26.60) (304.50) (230.40)
Retained Earnings, RE 307.50 48.70 52.70
Earnings B4 Interest & Taxes, EBIT 217.00 (77.60) 169.20
Market Value of Equity, MVE 4,941.39 2,890.51 3,550.98
Book Value of Tot. Liab., BVTL 2,844.30 3,243.20 3,361.30
Total Sales, TS 1,430.00 1,370.70 1,437.20
Total Assets, TA 5,030.90 5,457.20 5,795.00
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Altman's Financial Ratios 12/31/97A 12/31/98A 03/31/99Q
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X1 = WC/TA (0.01) (0.06) (0.04)
X2 = RE/TA 0.06 0.01 0.01
X3 = EBIT/TA 0.04 (0.01) 0.03
X4 = MVE/BVTL 1.74 0.89 1.06
X5 = TS/TA 0.28 0.25 0.25
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Bankruptcy Predictor Index, Z (2) 1.55 0.68 0.94
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Company Health Assessment (3,4,5) Near Near Near
Death Death Death
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Footnotes:
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1. Data obtained from the 12/31/98 Annual Report and the
5/4/99 earnings release for 1Q99 (see URLs below). MVE
was valued at US$30.38/share on 12/31/97 (0.6741 US$/C$),
at US$17.50/share on 12/31/98 (0.7199 US$/C$), and at
US$21.5/share on 3/31/98 (0.7199 US$/C$). EBIT and TS
are annual figures from the annual report or quarterly
figures from the earnings release, multiplied times four
for an annualized basis.
biz.yahoo.com
biz.yahoo.com
2. Bankruptcy Predictor Index:
Z = (1.2*X1)+(1.4*X2)+(3.3*X3)+(0.6*X4)+(1.0*X5)
3. Company Health Assessment:
Z > 3.0 = Strong
1.8 < Z < 3.0 = In Danger
Z < 1.8 = Near Death
4. 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.
5. 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. |
