Stellus Capital Investment (Stellus Capital Investment) Probability of Financial Distress (%) : 0.04% (As of May. 01, 2024)

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What is Stellus Capital Investment 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, Stellus Capital Investment's Probability of Financial Distress (%) is 0.04%.

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 Stellus Capital Investment's Probability of Financial Distress (%)

For the Asset Management subindustry, Stellus Capital Investment'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.

Stellus Capital Investment's Probability of Financial Distress (%) Distribution in the Asset Management Industry

For the Asset Management industry and Financial Services sector, Stellus Capital Investment's Probability of Financial Distress (%) distribution charts can be found below:

* The bar in red indicates where Stellus Capital Investment's Probability of Financial Distress (%) falls into.

Stellus Capital Investment 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

-7.88

The Probability of Financial Distress (%) (PFD) was then obtianed by:

PFD	=	1	/	(1 + e^(-LPFD))	*	100%
	=	0.04%

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 banks, CASHMTA is measured as:

CASHMTA

(Balance Sheet Cash And Cash Equivalents + Money Market Investments)

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).

Stellus Capital Investment (NYSE:SCM) 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.

Stellus Capital Investment Probability of Financial Distress (%) Related Terms

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Stellus Capital Investment (Stellus Capital Investment) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Financial Services » Asset Management » Stellus Capital Investment Corp (NYSE:SCM) » Definitions » Probability of Financial Distress (%)

Comparable Companies

Traded in Other Exchanges

GO0:Germany

Address

4400 Post Oak Parkway, Suite 2200, Houston, TX, USA, 77027

Website

https://www.stelluscapital.com

Stellus Capital Investment Corp is a closed-end, non-diversified management investment company. Its objective is to maximize the total return to its stockholders in the form of current income and capital appreciation. It invests through a first lien, second lien, unitranche, and mezzanine debt financing, often with a corresponding equity investment. The company invests in various sectors, such as business services, energy, general industrial, government services, healthcare, software, and specialty finance. Business activity of the firm is functioned through the United States and it generates revenue in the form of interest income on debt investments and capital gains and distributions.

Executives

Bruce R Bilger	director	C/O STELLUS CAPITAL, 10000 MEMORIAL DRIVE, SUITE 500, HOUSTON TX 77024
Robert T. Ladd	director, officer: President and CEO	STELLUS CAPITAL, 10000 MEMORIAL DRIVE STE 500, HOUSTON TX 77024
Dean D'angelo	director	STELLUS CAPITAL, 10000 MEMORIAL DRIVE STE 500, HOUSTON TX 77024
J Tim Arnoult	director	100 NORTH TRYON STREET, NC1-007-52-10, CHARLOTTE NC 28255
Joshua T. Davis	director	STELLUS CAPITAL, 10000 MEMORIAL DRIVE STE 500, HOUSTON TX 77024
W. Todd Huskinson	officer: CFO & Chief Compliance Officer	STELLUS CAPITAL, 10000 MEMORIAL DRIVE STE 500, HOUSTON TX 77024
Robert Ladd	director, officer: President and CEO	C/O LADDCAP VALUE ADVISORS LLC, 650 FIFTH AVENUE, SUITE 600, NEW YORK NY 10019
Paul Keglevic	director	STELLUS CAPITAL, 10000 MEMORIAL DRIVE STE 500, HOUSTON TX 77024
Dc Funding Spv 2, L.l.c.	10 percent owner, other: See Footnotes 1 and 2	1166 AVENUE OF THE AMERICAS, NINTH FLOOR, NEW YORK NY 10036
D. E. Shaw & Co, L.p.	10 percent owner, other: See Footnotes 1 and 2	1166 AVENUE OF THE AMERICAS, NINTH FLOOR, NEW YORK NY 10036
David E Shaw	10 percent owner, other: See Footnotes 1 and 2	120 WEST FORTY-FIFTH STREET, 39TH FLOOR, NEW YORK NY 10036
D. E. Shaw Direct Capital, L.l.c.	10 percent owner, other: See Footnotes 1 and 2	1166 AVENUE OF THE AMERICAS, NINTH FLOOR, NEW YORK NY 10036
William C Repko	director	STELLUS CAPITAL, 10000 MEMORIAL DRIVE STE 500, HOUSTON TX 77024