Hi all,
May I, please, ask a question about Altman Z? When applied to comparative valuations of companies with limited free float, such as IPOs, will not it make sense to use for Altman Z calculation adjusted pro forma book value or market value of traded equity (that is value of free float) rather than total market value of all classes of equity? As far as I can see, book value of equity is widely used for Z-scores of private firms, and I have always used them to calculate Altman’s. So my logic is why won’t consider IPOs as a case of firms which are, so to say, not entirely private.
I suggest the best solution is to use pro forma book value of equity adjusted with market value of shares sold through the offering, is not it?
Best regards,
mi86