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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, Coda Octopus Group's Probability of Financial Distress (%) is 0.01%.
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 Aerospace & Defense subindustry, Coda Octopus Group'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 Aerospace & Defense industry and Industrials sector, Coda Octopus Group's Probability of Financial Distress (%) distribution charts can be found below:
* The bar in red indicates where Coda Octopus Group'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 |
= | -8.95 |
The Probability of Financial Distress (%) (PFD) was then obtianed by:
PFD | = | 1 | / | (1 + e^(-LPFD)) | * | 100% |
= | 0.01% |
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).
Coda Octopus Group (NAS:CODA) 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 Coda Octopus Group's Probability of Financial Distress (%) provided by GuruFocus.com. Please click on the following links to see related term pages.
Annmarie Gayle | director, officer: Chief Executive Officer | 6526 COTTONWOOD ST,, MURRAY UT 84107 |
Niels Soendergaard | 10 percent owner | 6526 COTTONWOOD ST, MURRAY UT 84107 |
G Tyler Runnels | 10 percent owner | 1999 AVENUE OF THE STARS, STE 2030, LOS ANGELES CA 90067 |
John Steven Emerson | 10 percent owner | 1522 ENSLEY AVENUE, LOS ANGELES CA 90024 |
Anthony Jean Tata | director | 1 WATER CLUB WAY,, PH2104, NORTH PALM BEACH FL 33408 |
Robert Ronald Harcourt | director | 3078 BRINE WAY, THE VILLAGES FL 32163 |
Gayle Michelle Jardine | officer: Interim CFO. | 12 RAVELRIG GAIT,, BALERNO, EDINBURGH X0 EH14 7NH |
Blair Graeme Cunningham | officer: Chief Technology Officer | 164 WEST 25TH STREET, NEW YORK NY 10001 |
Nathan William Parker | officer: Chief Financial Officer. | 14061 S. OLD SADDLE RD, DRAPER UT 84020 |
Kevin James Kane | officer: CEO Coda Octopus Colmek, Inc. | 11864 VISTA GLEN CT, SANDY UT 84092 |
Michael Midgley | officer: Acting Chief Financial Officer | 6526 COTTONWOOD ST,, MURRAY UT 84107 |
Michael J. Hamilton | director | NEWPORT OFFICE CENTER, 111 TOWN SQUARE PLACE, SUITE 1201, JERSEY CITY NJ 07310 |
Bryan Ezralow | 10 percent owner | THE EZRALOW CO, LLC, 23622 CALABASAS ROAD, SUITE 200, CALABASAS CA 91302-1549 |
Mary Losty | director | 613 LOCUST ST, CAMBRIDGE MD 21613 |
Joseph Charles Plumb | director | 3917, FAIRBREEZE CIR, WESTLAKE VLG CA 91361 |
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