Harken Energy Corporation (HEC) Message Board

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Gold/Mining/Energy : Harken Energy Corporation (HEC)

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To: Razorbak who wrote (4400)	5/30/1999 7:29:00 PM
From: SDR-SI	Read Replies (1) of 5504

Razor, The referenced post gives your "near death" .75 Altman rating for HEC, based upon Q/E 3/99 figures. With the Altman rating being defined as: Z = (1.2X1)+(1.4X2)+(3.3X3)+(0.6X4)+(1.0*X5) where: X1 = Working Capital / Total Assets = WC/TA X2 = Retained Earnings / Total Assets = RE/TA X3 = EBIT / Total Assets = EBIT/TA X4 = Market Value of Equity / Book Value of Liabilities = MVE/BVTL X5 = Total Sales / Total Assets = TS/TA It would appear to me that the only immediate effect of the NPI interest conversions would be a possible small current increase in X4 due to additional shares (if the price did not correspondingly decrease due to dilution) and a small future increase in X3 from increased EBIT resulting from the prior NPI $ not having to be accommodated and the resultant small increase in X2 from additional corresponding RE. If that is correct, it would thus appear that, as far as the Altman model is concerned, the conversion doesn't do much to get the company out of the model's "near death" range. Is that consistent with your interpretation? Or am I missing your point? Steve

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