And The Rumor Mill Continues To Run, Tick-Tock!

VIA IHUB Boards (interpret as you will.. do your own DD!) no2koolaid	Monday, 10/19/15 09:04:29 AM
Re: John_Langston post# 167160
Post # of 167205

Strategists employ a range of means to assess the value and risks of a prospective acquisition target. As such, I thought I would share one aspect of that with the board. Those who are technical traders should enjoy these research findings, as they are grounded in statistical analysis.

To that end, there seems to be misinformation about Elite and its stock price, some indicating that the p/s will hit 2 cents or even that the company may go bankrupt. While BK was a possibility around 2006, it would seem it is not today. But, it was that very argument that caused me to look at Elite’s current financial situation using Altman Z-score. And, let me say at the onset, Elite’s Altman Z-score places it well above the range that would be considered a risk. In fact, its specific Z-score places it in a strong financial position for future success; as anyone who conducted the objective analysis would find.

Now my purpose was not merely to point out that the speculations about Elite’s financial position were unfounded, I also wanted to address the misinformation about the share price being at risk of dropping to what? Two cents! For the p/s to hit an historic low there must be more than psychological factors in support of a 90% plus drop. There must be a causal financial impact that would transcend even a failed P-3 because, again, the Altman Z-score is based on current financials and the financials would not change with a failed P-3.

Now, I know the question that insightful people would want to know right now. If the Altman Z-score is statistically related to bankruptcy, is there a relationship between a company’s share price and its Z-score? Well, there is. The stronger the financials indicated in the calculation of the Z-score the more we see ascending share prices and, thus, the lower the score based on poorer financials, the lower the p/s. But, don’t take my word for it, please do take the time to read this research from a first class academic journal, the Journal of Modern Accounting and Auditing.

http://www.academia.edu/3042826/Bankruptcy_Probability_and_Stock_Prices_The_Effect_of_Altman_Z-Score_Information_on_Stock_Prices_Through_Panel_Data

Response:
no2koolaid Member Level Monday, 10/19/15 10:42:35 AM
Re: Clarendon post# 167187 Post # of 167205 You are most welcome. On your question, I would only use the most recent data. To do otherwise would create a statistical bias. As to the score, as you know there are eight specific categories and there is little variability when filling in the blanks though there may be some depending on what is used, as you noted. Still, I do not wish to have this discussion go off-track because someone got a different score and seeks to suggest the difference is reflective of an inaccurate measure. As you may know, Altman later worked with two others to create another scoring mechanism based on his original work and this is viewed as a second generation model, which uses seven categories. Using that version, we see that it also shows Elite to be economically sound and at no risk financially; again supporting the argument that the p/s should be ascending not declining because Elite's financial position, irrespective of the P-3, should continue to improve.

richme	Monday, 10/19/15 11:36:43 AM
Re: no2koolaid post# 167195

 Are you suggesting that if P-3 results are irrelevant when it comes to being "economically sound and at no risk financially" and if so how would Elite's position continue to improve since its generic ONLY SOURCE OF REVENUE short of diluting is not increasing.

Further if the factors used in developing the score are unknown that fits nicely with NH's bias towards secrecy. Very convenient.

Couch			Monday, October 19, 2015 11:48:43 AM
Re: richme

 Pure misinformation - ELTP CFP off of operations alone- and Elite's revenue streams increasing quarter over quarter.