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AVADA Group (ASX:AVD) Financial Strength : 4 (As of Dec. 2023)


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What is AVADA Group Financial Strength?

AVADA Group has the Financial Strength Rank of 4.

GuruFocus Financial Strength Rank measures how strong a company's financial situation is. It is based on these factors:

1. The debt burden that the company has as measured by its Interest Coverage (current year). The higher, the better.
2. Debt to revenue ratio. The lower, the better.
3. Altman Z-Score.

AVADA Group's Interest Coverage for the quarter that ended in Dec. 2023 was 6.63. AVADA Group's debt to revenue ratio for the quarter that ended in Dec. 2023 was 0.22. As of today, AVADA Group's Altman Z-Score is 1.51.


Competitive Comparison of AVADA Group's Financial Strength

For the Infrastructure Operations subindustry, AVADA Group's Financial Strength, along with its competitors' market caps and Financial Strength 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.


AVADA Group's Financial Strength Distribution in the Construction Industry

For the Construction industry and Industrials sector, AVADA Group's Financial Strength distribution charts can be found below:

* The bar in red indicates where AVADA Group's Financial Strength falls into.



AVADA Group Financial Strength Calculation

GuruFocus Financial Strength Rank measures how strong a company's financial situation is. It is based on these factors

A company ranks high with financial strength is likely to withstand any business slowdowns and recessions.

1. The debt burden that the company has as measured by its Interest Coverage (current year). The higher, the better.

Note: If both Interest Expense and Interest Income are empty, while Net Interest Income is negative, then use Net Interest Income as Interest Expense.

Interest Coverage is a ratio that determines how easily a company can pay interest expenses on outstanding debt. It is calculated by dividing a company's Operating Income (EBIT) by its Interest Expense:

AVADA Group's Interest Expense for the months ended in Dec. 2023 was A$-1.9 Mil. Its Operating Income for the months ended in Dec. 2023 was A$12.8 Mil. And its Long-Term Debt & Capital Lease Obligation for the quarter that ended in Dec. 2023 was A$39.4 Mil.

AVADA Group's Interest Coverage for the quarter that ended in Dec. 2023 is

Interest Coverage=-1*Operating Income (Q: Dec. 2023 )/Interest Expense (Q: Dec. 2023 )
=-1*12.804/-1.931
=6.63

The higher the ratio, the stronger the company's financial strength is.

2. Debt to revenue ratio. The lower, the better.

AVADA Group's Debt to Revenue Ratio for the quarter that ended in Dec. 2023 is

Debt to Revenue Ratio=Total Debt (Q: Dec. 2023 ) / Revenue
=(Short-Term Debt & Capital Lease Obligation + Long-Term Debt & Capital Lease Obligation) / Revenue
=(5.328 + 39.437) / 203.266
=0.22

3. Altman Z-Score.

Z-Score model is an accurate forecaster of failure up to two years prior to distress. It can be considered the assessment of the distress of industrial corporations.

The zones of discrimination were as such:

When Z-Score is less than 1.81, it is in Distress Zones.
When Z-Score is greater than 2.99, it is in Safe Zones.
When Z-Score is between 1.81 and 2.99, it is in Grey Zones.

AVADA Group has a Z-score of 1.51, indicating it is in Distress Zones. This implies bankrupcy possibility in the next two years.

Warning Sign:

Altman Z-score of 1.51 is in distress zone. This implies bankruptcy possibility in the next two years.

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.


AVADA Group  (ASX:AVD) Financial Strength Explanation

The maximum rank is 10. Companies with rank 7 or higher will be unlikely to fall into distressed situations. Companies with rank of 3 or less are likely in financial distress.

AVADA Group has the Financial Strength Rank of 4.


AVADA Group Financial Strength Related Terms

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AVADA Group (ASX:AVD) Business Description

Traded in Other Exchanges
N/A
Address
116 Ipswich Road, Suite 1, Level 2, Woolloongabba, QLD, AUS, 4102
AVADA Group Ltd is an Australian traffic management operator and ancillary service provider with an established network throughout Queensland and New South Wales. The group has two reportable segments: Queensland Traffic Management and New South Wales Traffic Management. Queensland Traffic Management is the key revenue generator for the group. It provides services to government clients and major contractors in the civil infrastructure and maintenance sector.