Everybody is talking about a bull run in the stock market now. Most stock prices are rising, some by a few percent a day, whether stocks of good companies or the bad ones. So in order to make easy money, the stock market is the place to be. Everybody is going to make big money from buying and selling stocks of the companies. No need to bother what the company does, wasting time only. Isn't it that easy, or is it?
Before one put in all his money into the stock market, buying shares based on hot tips and "reliable" rumours, let him be forewarned that in Bursa, there ain’t no tooth fairy. For most people, the safety of capital may be of utmost importance. Get yourself familiar with this unloved Altman Score in the link appended, apply it to the stocks that you are asked to buy in this i3ivestor forum first before you jump into the sea, if you don't want to get yourself burnt.
http://en.wikipedia.org/wiki/Altman_Z-score
K C Chong
The Unloved Altman Z Score for KNM Z = 1.2X_1 + 1.4X_2 + 3.3X_3 + 0.6X_4+1X_5
X_1 = Working Capital / Total Assets
X_2 = Retained Earnings / Total Assets
X_3 = EBITDA / Total Assets
X_4 = Market Value of Equity / Total Liabilities
X_5 = Net Sales / Total Assets
From the last financial statements of KNM, Z=0.54
When Z is >= 3.0, the firm is most likely safe based on the financial data. When Z is 2.7 to 3.0, the company is probably safe from bankruptcy, but this is in the grey area and caution should be taken. When Z is 1.8 to 2.7, the company is likely to be bankrupt within 2 years. When Z is <= 1.8, the company is highly likely to be bankrupt.
No, I am not saying KNM is going to bankrupt. The Altman Score is just a guide, a very good guide for companies having high debts.
Yeah I know I know, General Lee is going to goreng this stock for the benefit of all of us here.
I still duno how to calculate... but i can reffer to book --> Dynaquest. year 2011 Z score for Ytlp = 1.18 only, TM =1.51, Tenaga = 1.63,??? i check again for PN17 ctr --> Silver, Z's for yr 08 =2.42, yr 09 = 2.28, yr 2010 = 2.73! Maybe i reffer to wrong book?
samsam92, I used the latest quarterly report as at 31/3/2013. I annualized the revenue and earnings by multiply the quarterly sales and earnings by 4.
You could use the annual financial statement ended 31/12/2012. There may be small difference. However it does not change the status of its Z score, I think. Basically this is because KNM's balance sheet is like shit, and its earnings is "kan na m." Sorry sorry ah.
Altman Z score is very useful in predicting the probability of the bankruptcy risk of a company, especially for a company with a bloated balance sheet. KNM is an excellent example.
ya..i am not interested in knm at all..just want to know how bro kc use this formula..so have to look at their balance sheet and count..okok i try to calculate and see..sorry newbie here..so need your help..
爱丽斯 梦幻世界, Basing on the half year financial report 2013, with the annualized total sales and EBITDA, the Z score for YTLP is 1.4 <1.8. Does it mean that YTLP is highly likely to be bankrupt? Not at all.
The reason why YTLP has such a low Z score is because of its very high debts of 23 billion Ringgit. Annual interest payment amounts to 400m a year. However, YTLP has a steady recurring cash flow from operations of more than 2 billion a year.
But can this be said about companies like KNM, Patimas, Amedia, Smartag etc etc?
YTLP Working capital 7681314 Total assets 39069402 X1 0.1966069 Retained earnings 6294893 X2 0.161120792 EBITDA 2982828 X3 0.076346907
X_4 = Market Value of Equity / Total Liabilities 0.593
X_5 = Net Sales / Total Assets 0.252
Z 1.700
When Z is >= 3.0, the firm is most likely safe based on the financial data. When Z is 2.7 to 3.0, the company is probably safe from bankruptcy, but this is in the grey area and caution should be taken. When Z is 1.8 to 2.7, the company is likely to be bankrupt within 2 years. When Z is <= 1.8, the company is highly likely to be bankrupt.
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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
Posted by kcchongnz > 2013-05-12 13:32 | Report Abuse
Everybody is talking about a bull run in the stock market now. Most stock prices are rising, some by a few percent a day, whether stocks of good companies or the bad ones. So in order to make easy money, the stock market is the place to be. Everybody is going to make big money from buying and selling stocks of the companies. No need to bother what the company does, wasting time only. Isn't it that easy, or is it? Before one put in all his money into the stock market, buying shares based on hot tips and "reliable" rumours, let him be forewarned that in Bursa, there ain’t no tooth fairy. For most people, the safety of capital may be of utmost importance. Get yourself familiar with this unloved Altman Score in the link appended, apply it to the stocks that you are asked to buy in this i3ivestor forum first before you jump into the sea, if you don't want to get yourself burnt. http://en.wikipedia.org/wiki/Altman_Z-score K C Chong