GUID has been successfully added to your Stock Email Alerts list.
You can manage your stock email alerts here.
GUID has been removed from your Stock Email Alerts list.
Please enter Portfolio Name for new portfolio.
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, Guidance Software's Probability of Financial Distress (%) is 0.00%.
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.
For the Software - Application subindustry, Guidance Software'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 Software industry and Technology sector, Guidance Software's Probability of Financial Distress (%) distribution charts can be found below:
* The bar in red indicates where Guidance Software'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 |
= | 0.00 |
The Probability of Financial Distress (%) (PFD) was then obtianed by:
PFD | = | 1 | / | (1 + e^(-LPFD)) | * | 100% |
= | 0.00% |
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).
Guidance Software (NAS:GUID) 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 Guidance Software's Probability of Financial Distress (%) provided by GuruFocus.com. Please click on the following links to see related term pages.
Van Schoonenberg Robert G | director | 150 N. ORANGE GROVE BLVD, PASADENA CA 91103 |
Maximus Carnecchia Scipio | director | 5005 WATERIDGE VISTA CIRCLE, SAN DIEGO CA 92121 |
Michael J Mcconnell | director | P.O. BOX 6280, NEWPORT BEACH CA 92658 |
Alfredo Gomez | officer: SVP, General Counsel | 10420 RESEARCH ROAD SE, ALBUQUERQUE NM 87123 |
Reynolds Bish | director | C/O IOMEGA CORPORATION, 10955 VISTA SORRENTO PARKWAY, SAN DIEGO CA 92130 |
Patrick Dennis | director, officer: CEO and President | 1055 E. COLORADO BOULEVARD, PASADENA CA 91106 |
Rgm Capital, Llc | 10 percent owner | 9010 STRADA STELL COURT, SUITE 105, NAPLES FL 34109 |
Robert G Moses | 10 percent owner | RGM CAPITAL, LLC, 9010 STRADA STELL COURT, SUITE 105, NAPLES FL 34109 |
Jay R Ackerman | officer: Chief Revenue Officer | C/O SERVICESOURCE INTERNATIONAL INC 634 SECOND STREET SAN FRANCISCO CA 94107 |
Marshall S Geller | director | 10866 WILSHIRE BLVD., SUITE 1450, LOS ANGELES CA 90024 |
Dale L Fuller | director | 215 NORTH MARENGO AVE., 2ND FLOOR, PASADENA CA 91101 |
Amit Yoran | director | C/O TENABLE HOLDINGS, INC., 6100 MERRIWEATHER DRIVE, COLUMBIA MD 21044 |
From GuruFocus
By Holly LaFon Holly LaFon • 08-21-2017
By gurufocus gurufocus • 07-06-2011
By gurufocus 10qk • 05-04-2010
By gurufocus • 08-10-2009
By gurufocus 10qk • 11-05-2009
Disclaimers: GuruFocus.com is not operated by a broker or a dealer. It has an affiliated registered investment adviser, which serves as the subadviser to an exchange traded fund. This investment adviser does not provide advice to individual investors. Under no circumstances does any information posted on GuruFocus.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute investment advice or recommendations. The individuals or entities selected as "gurus" may buy and sell securities before and after any particular article and report and information herein is published, with respect to the securities discussed in any article and report posted herein. Gurus may be added or dropped from the GuruFocus site at any time. In no event shall GuruFocus.com be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on GuruFocus.com, or relating to the use of, or inability to use, GuruFocus.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. The gurus listed in this website are not affiliated with GuruFocus.com, LLC. Stock quotes provided by InterActive Data. Fundamental company data provided by Morningstar, updated daily.