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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, Allbirds's Probability of Financial Distress (%) is 1.80%.
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 Apparel Retail subindustry, Allbirds'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 Retail - Cyclical industry and Consumer Cyclical sector, Allbirds's Probability of Financial Distress (%) distribution charts can be found below:
* The bar in red indicates where Allbirds'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 |
= | -4.00 |
The Probability of Financial Distress (%) (PFD) was then obtianed by:
PFD | = | 1 | / | (1 + e^(-LPFD)) | * | 100% |
= | 1.80% |
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).
Allbirds (NAS:BIRD) 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 Allbirds's Probability of Financial Distress (%) provided by GuruFocus.com. Please click on the following links to see related term pages.
Joseph Vernachio | officer: Chief Operating Officer | C/O ALLBIRDS, INC., 730 MONTGOMERY STREET, SAN FRANCISCO CA 94111 |
Ann Mitchell | officer: Chief Financial Officer | C/O ALLBIRDS, INC., 730 MONTGOMERY STREET, SAN FRANCISCO CA 94111 |
Dan Levitan | director, 10 percent owner | 505 FIFTH AVE S, STE 600, SEATTLE WA 98104 |
Michael J Bufano | officer: Chief Financial Officer | C/O ALLBIRDS, INC., 730 MONTGOMERY STREET, SAN FRANCISCO CA 94111 |
Joseph Zwillinger | director, 10 percent owner, officer: Co-Chief Executive Officer | C/O BIG SKY GROWTH PARTNERS, INC., 1201 WESTERN AVENUE, SUITE 406, SEATTLE WA 98101 |
Ann Freeman | director | C/O ALLBIRDS, INC., 730 MONTGOMERY STREET, SAN FRANCISCO CA 94111 |
Timothy O. Brown | director, 10 percent owner, officer: Co-Chief Executive Officer | C/O ALLBIRDS, INC., 730 MONTGOMERY STREET, SAN FRANCISCO CA 94111 |
Goldman Sachs Group Inc | 10 percent owner | 200 WEST STREET, NEW YORK NY 10282 |
Sachs International Goldman | 10 percent owner | PLUMTREE COURT, 25 SHOE LANE, LONDON X0 EC4A 4AU |
Goldman Sachs & Co. Llc | 10 percent owner | 200 WEST STREET, NEW YORK NY 10282 |
Maveron Equity Partners V, L.p. | 10 percent owner | 411 FIRST AVENUE SOUTH, SUITE 600, SEATTLE WA 98104 |
Maveron General Partner V, Llc | 10 percent owner | 411 FIRST AVENUE SOUTH, SUITE 600, SEATTLE WA 98104 |
Maveron V Entrepreneurs' Fund, L.p. | 10 percent owner | 411 FIRST AVENUE SOUTH, SUITE 600, SEATTLE WA 98104 |
Mep Associates V, L.p. | 10 percent owner | 411 FIRST AVENUE SOUTH, SUITE 600, SEATTLE WA 98104 |
Neil Harris Blumenthal | director | C/O WARBY PARKER INC., 233 SPRING STREET, 6TH FLOOR, NEW YORK NY 10013 |
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