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Strategies & Market Trends : Bankruptcy Predictor Model -- Ignore unavailable to you. Want to Upgrade?

To: Razorbak who wrote (7)	3/15/1999 2:17:00 AM
From: Mad2	Read Replies (2) \| Respond to of 477

Razor, here's the figures on GKI a favorite POS that I short on spikes (gotta be careful as there are fools who bid it up on news) GKI Working Capital 1.91 Total Assets 5 Retained Earnings -23.6 EBIT -5.4 Equity MV 91.9 Book Value Liability 0.88 Total Sales 0 Z=0.4584-6.608-3.564+62.65909091+0 = 52.94549091 Following Altman's formula the 4th figure above is a weighting of the market value of equity to book value of liabilities, which in this case is over 60. Well their current burn rate is around 1 mil/month with no real sales, thus their liabilities can skyrocket and of course their stock can continue its downward trend. Interestingly one reason the market cap stays up is the guy who controls it gives stock away like candy. Right now GKI's is in danger of loosing their listing on the AMEX. Going back to QFAB, their situation was a troubled ERP installation in the 3 qtr of 98, which pushed their lead times out drove costs up and pissed off customers. They announced their troubles to shareholders in the form of a earnings warning last October that trashed the stock (high of 20 to its current value of 4). For ref they were making .25/share per qtr and now are turning out .04-.06/shr per qtr. I've got some money riding on the chance they'll bounce back a bit here in the 1st (and it is a gamble) Quaker is leader in their market. Admitedly I think mgmt showed their stupidity for getting themselves into this trouble in the first place(Chairman has been buying stock at 4 and change). Interestingly looking at the Altman formula for QFAB, should they get EBIT back to a respectable 28mil (double it's current) the Z becomes 3.24 assuming a market value of 180 mil or 12/share @ a p/e of 15. Having run some number through it gives you a quantative feel for what contributes to value (or detracts from it) based upon a "formula"