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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, First Watch Restaurant Group's Probability of Financial Distress (%) is 0.06%.
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 Restaurants subindustry, First Watch Restaurant 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 Restaurants industry and Consumer Cyclical sector, First Watch Restaurant Group's Probability of Financial Distress (%) distribution charts can be found below:
* The bar in red indicates where First Watch Restaurant 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 |
= | -7.44 |
The Probability of Financial Distress (%) (PFD) was then obtianed by:
PFD | = | 1 | / | (1 + e^(-LPFD)) | * | 100% |
= | 0.06% |
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).
First Watch Restaurant Group (NAS:FWRG) 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 First Watch Restaurant Group's Probability of Financial Distress (%) provided by GuruFocus.com. Please click on the following links to see related term pages.
William A Kussell | director | C/O ADVENT INTERNATIONAL CORPORATION, 75 STATE STREET 29TH FLOOR, BOSTON MA 02109 |
Christopher Anthony Tomasso | director, officer: President and CEO | C/O FIRST WATCH RESTAURANT GROUP, INC., 8725 PENDERY PLACE, SUITE 201, BRADENTON FL 34201 |
Matthew Eisenacher | officer: Chief Brand Officer | 8725 PENDERY PLACE, STE. 201, BRADENTON FL 34201 |
Irene Chang Britt | director | CAMPBELL SOUP COMPANY, ONE CAMPBELL PLACE, CAMDEN NJ 08103 |
Advent International Corp/ma | 10 percent owner | 800 BOYLSTON STREET SUITE 3300, BOSTON MA 02199 |
David Paresky | director | ADVENT INTERNATIONAL, PRUDENTIAL TOWER, 800 BOYLSTON STREET, BOSTON MA 02199 |
Tricia Glynn | director | C/O ADVENT INERNATIONAL CORPORATION, PRUDENTIAL TOWER, 800 BOYLSTON STREET, BOSTON MA 02199 |
Advent International Gp, Llc | 10 percent owner | 800 BOYLSTON STREET SUITE 3300, BOSTON MA 02199 |
Michael James White | director | C/O ADVENT INTERNATIONAL, PRUDENTIAL TOWER, 800 BOYLSTON STREET, BOSTON MA 02199 |
Advent Partners Gpe Vii-b Cayman Limited Partnership | 10 percent owner | C/O ADVENT INTERNATIONAL CORPORATION, 75 STATE STREET, BOSTON MA 02109 |
Stephanie Lilak | director | C/O DUNKIN' BRANDS, INC., 130 ROYALL STREET, CANTON MA 02021 |
Hope H Melville Iii | officer: CFO and Treasurer | AFC ENTERPRISES INC, SIX CONCOURSE PKWY STE 1700, ATLANTA GA 30328-5352 |
Middleton Calum Alasdair Johnstone | officer: Chief Strategy Officer | C/O FIRST WATCH RESTAURANT GROUP, INC., 8725 PENDERY PLACE, SUITE 201, BRADENTON FL 34201 |
Gpe Viii Gp Limited Partnership | 10 percent owner | C/O ADVENT INTERNATIONAL CORP., 75 STATE STREET, BOSTON MA 02109 |
Gpe Viii Gp S.a.r.l. | 10 percent owner | CO ADVENT INTERNATIONAL, 800 BOYLSTON STREET, BOSTON MA 02199 |
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