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Probability of Financial Distress (%) measures the probability that a company will go bankrupt in the upcoming year given its current financial position. A higher ratio indicates a larger probability of bankruptcy for the company, while a lower ratio indicates a healthier fundamental. As of today, BIMI International Medical's Probability of Financial Distress (%) is 2.43%.
Like the Altman Z-Score, the PFD measures a company's bankruptcy risk. However, the main drawback of the Z-score is it does not apply to banks and insurance companies. According to Investopedia, the concept of "working capital" does not apply to banks and insurance companies, as financial institutions do not have typical current assets or current liabilities like inventories or accounts payable.
For the Pharmaceutical Retailers subindustry, BIMI International Medical's Probability of Financial Distress (%), along with its competitors' market caps and Probability of Financial Distress (%) data, can be viewed below:
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.
For the Healthcare Providers & Services industry and Healthcare sector, BIMI International Medical's Probability of Financial Distress (%) distribution charts can be found below:
* The bar in red indicates where BIMI International Medical's Probability of Financial Distress (%) falls into.
Probability of Financial Distress (%) (PFD) was developed by John Campbell, Jens Hilscher and Jan Szilagyi in their Search of Distress Risk. It measures the probability that a company will go bankrupt within the next 12 months given its current financial position.
The Probability of Financial Distress (%) was obtained by a logit probability model based on eight explanatory variables. The logit formula to compute the probability of financial distress (LPFD) is given below:
LPFD | = | -20.12 * NIMTAAVG | + | 1.60 * TLMTA | - | 7.88 * EXRETAVG | + | 1.55 * SIGMA | - | 0.005 * RSIZE | - | 2.27 * CASHMTA | + | 0.070 * MB | - | 0.09 * PRICE | - | 8.87 |
= | -3.69 |
The Probability of Financial Distress (%) (PFD) was then obtianed by:
PFD | = | 1 | / | (1 + e^(-LPFD)) | * | 100% |
= | 2.43% |
The eight explanatory variables are:
1. NIMTAAVG = Net Income to Market Total Assets
NIMTAAVG | = | Net Income | / | Market Total Assets |
= | Net Income | / | (Market Cap + Total Liabilities) |
*Note that for companies reported quarterly, geometrically declining weighted quarterly Net Income data in latest four quarters are used.
2. TLMTA = Total liabilities to Market Total Assets
TLMTA | = | Total Liabilities | / | Market Total Assets |
3. CASHMTA = Cash to Market Total Assets
For non-financial companies, CASHMTA is measured as:
CASHMTA | = | Cash, Cash Equivalents, Marketable Securities | / | Market Total Assets |
4. EXRETAVG = Excess Return compared to the S&P 500
EXRETAVG is the weighted excess return compared to the S&P 500 in past 12 month. Geometrically declining weights are imposed on the monthly excess return to reflect lagged information. The weight is halved each quarter.
5. SIGMA = Standard Deviation of Daily Returns
For sigma, we use the annualized standard deviation of a company's returns over the past 92 days (or 63 trading days).
6. RSIZE = Relative Size
RSIZE | = | log (Market Cap | / | Total Market Cap of S&P 500 companies) |
7. MB = Market to Adjusted Book Equity Ratio
MB | = | Market Cap | / | Adjusted Book Equity |
= | Market Cap | / | (Total Stockholders Equity + 0.1 * ( Market Cap - Total Stockholders Equity)) |
8. PRICE
PRICE is measured as the log of the stock price, capped at log(15).
BIMI International Medical (NAS:BIMI) Probability of Financial Distress (%) Explanation
Like the Altman Z-Score, the PFD measures a company's bankruptcy risk in the upcoming year. However, the main drawback of the Z-score is it does not apply to banks and insurance companies. According to Investopedia, the concept of "working capital" does not apply to banks and insurance companies, as financial institutions do not have typical current assets or current liabilities like inventories or accounts payable.
Thank you for viewing the detailed overview of BIMI International Medical's Probability of Financial Distress (%) provided by GuruFocus.com. Please click on the following links to see related term pages.
Ang Sammi Ean Seok | director | 2658 VISTA MONTE CIRCLE, CHINO HILLS CA 91709 |
Fnu Oudom | director | 7700 IRVINE CENTRE DRIVE, SUITE 800, IRVINE CA 92618 |
Xiaoping Wang | director | ROOM 4-6,NO.88-4 HUAYAN FIRST VILLAGE, SHAPINGBA DISTRICT, CHONGQING F4 400037 |
Baiqun Zhong | officer: CFO | 1-7, NO.27, HUAYAN NEW VILLAGE, JIULONGPO DISTRICT, CHONGQING F4 400039 |
Zhang Tingting | director, officer: Chief Financial Officer | 3708, FULI CENTER, NO.6 GANGXING ROOD, ZHANGSHANG DISTRICT, DALIAN, LIAONING F4 116001 |
Song Tiewei | director | 17 FLOOR, FULI CENTER NO.6,GANGXING ROOD, ZHANGSHANG DISTRICT, DALIAN, LIAONING F4 116001 |
Yongquan Bi | 10 percent owner | ROOM 3708, WANDA PLACE, 6 GANGWAN ROAD, ZHONGSHAN DISTRICT, DALIAN CITY, LIAONING PROVINCE F4 116001 |
Wang Lihua | director, 10 percent owner, officer: Chief Financial Officer | NO 4 4 12 58 BAJING ROAD, HEPING DISTRICT SHENYANG CITY, LIAONING PROVINCW F4 110003 |
Li Gang | director, 10 percent owner, officer: President and CEO | 19B3 62 WEST HINHE ROAD, SHENHE DISTRICT SHENYANG CITY, LIAONING PROVINCE F4 110000 |
Jiuding Yan | director | C/O NF ENERGY SAVING CORPORATION, 21 - JIA BEI SI DONG ROAD, SHENYANG F4 110021 |
Lesley Jin | director | C/O NF ENERGY SAVING CORPORATION, 21 - JIA BEI SI DONG ROAD, SHENYANG F4 110021 |
Maclean John Coleman | director | 112 E 4TH AVE, SUITE 206, OLYMPIA WA 98501 |
Zhongmin Wang | director | C/O NF ENERGY SAVING CORPORATION, 21 - JIA BEI SI DONG ROAD, SHENYANG F4 110021 |
Jianxin Wang | director | C/O NF ENERGY SAVING CORPORATION, 21 - JIA BEI SI DONG ROAD, TIE XI QU, SHENYANG F4 110021 |
Mia Kuang Ching | director | C/O NF ENERGY SAVING CORPORATION, 21 - JIA BEI SI DONG ROAD, TIE XI QU, SHENYANG F4 110021 |
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