What is E*TRADE Financial Probability of Financial Distress (%)?
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, E*TRADE Financial's Probability of Financial Distress (%) is 50.00%.
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.
Competitive Comparison of E*TRADE Financial's Probability of Financial Distress (%)
For the Capital Markets subindustry, E*TRADE Financial'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.
E*TRADE Financial's Probability of Financial Distress (%) Distribution in the Capital Markets Industry
For the Capital Markets industry and Financial Services sector, E*TRADE Financial's Probability of Financial Distress (%) distribution charts can be found below:
* The bar in red indicates where E*TRADE Financial's Probability of Financial Distress (%) falls into.
E*TRADE Financial Probability of Financial Distress (%) Calculation
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 |
| = | 0.00 |
The Probability of Financial Distress (%) (PFD) was then obtianed by:
| PFD | = | 1 | / | (1 + e^(-LPFD)) | * | 100% |
| = | 50.00% |
The eight explanatory variables are:
1. NIMTAAVG = Net Income to Market Total Assets
*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
3. CASHMTA = Cash to Market Total Assets
For banks, CASHMTA is measured as:
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
8. PRICE
PRICE is measured as the log of the stock price, capped at log(15).
E*TRADE Financial (E*TRADE Financial) Business Description
Traded in Other Exchanges
N/A
Address
671 North Glebe Road, Ballston Tower, Arlington, VA, USA, 22203
E-Trade is one of the largest direct-to-investor platforms in the United States and housed over $500 billion of invested assets and client cash at the end of 2019. The company generates interest income on noninvested cash on its platform, trading commissions, service charges including payment for order flow, and fees from stock plan administration. Almost all the company's revenue is generated within the U.S.
Executives
| Richard J Carbone |
director |
C/O E*TRADE FINANCIAL CORP., 11 TIMES SQUARE, 32ND FLOOR 10036-9992, NEWARK NJ 10036-9992 |
| Joshua Weinreich |
director |
C/O ANJIE LAROCCA, DEUTSCHE BANK, 345 PARK AVENUE, NEW YORK NY 10154 |
| Chad E. Turner |
officer: Chief Financial Officer |
11 TIMES SQUARE, 32ND FLOOR NEW YORK NY 10036 |
| Alice Milligan |
officer: EVP, Chief Customer Officer |
11 TIMES SQUARE 32ND FLOOR NEW YORK NY 10036 |
| Lori Sher |
officer: EVP, General Counsel |
11 TIMES SQUARE 32ND FLOOR NEW YORK NY 10036 |
| Michael Jos. Murphy |
officer: Sr. MD, Retail Brokerage |
11 TIMES SQUARE, 32ND FLOOR NEW YORK NY 10036 |
| Dirk W Wyckoff |
officer: Principal Accounting Officer |
671 N GLEBE ROAD ARLINGTON VA 22203 |
| Donna L Weaver |
director |
C/O E*TRADE FINANCIAL CORP. 11 TIMES SQUARE, 32ND FLOOR NEW YORK NY 10036-9992 |
| Jaime Wallace Ellertson |
director |
C/O SI CORP, 3500 LENOX ROAD SUITE 200, ATLANTA GA 30326 |
| Rodger A Lawson |
director |
C/O E*TRADE FINANCIAL CORP., 11 TIMES SQUARE, 32ND FLOOR, NEW YORK NY 10036-9992 |
| Shelley B Leibowitz |
director |
C/O MORGAN STANLEY, 1585 BROADWAY, NEW YORK NY 10036 |
| Rebecca Saeger |
director |
C/O E*TRADE FINANCIAL CORP., 11 TIMES SQUARE, 32ND FLOOR, NEW YORK NY 10036-9992 |
| Michael John Curcio |
officer: EVP, Institutional |
C/O E*TRADE FINANCIAL CORP. 11 TIMES SQUARE, 32ND FLOOR NEW YORK NY 10036-9992 |
| James Lam |
director |
C/O DAVIS POLK & WARDWELL LLP 450 LEXINGTON AVE NEW YORK NY 10017 |
| Matthew Minetola |
officer: Chief Information Officer |
300 GALLERIA PARKWAY, NW ATLANTA GA 30339 |
E*TRADE Financial (E*TRADE Financial) Headlines
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