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Calamos Asset Management, Inc. (NAS:CLMS)
Financial Strength Rank
8 (As of Dec. 2013)

Calamos Asset Management, Inc. has the Financial Strength Rank of 8. It shows strong financial strength and is unlikely to fall into distressed situations.

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.

Calamos Asset Management, Inc.'s interest coverage for the quarter that ended in Dec. 2013 was 14.58. Calamos Asset Management, Inc.'s debt to revenue ratio for the quarter that ended in Dec. 2013 was 1.38. As of today, Calamos Asset Management, Inc.'s Altman Z-score is 2.40.


Definition

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.

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:

Calamos Asset Management, Inc.'s interest expense for the three months ended in Dec. 2013 was $-1.5 Mil. Its operating income for the three months ended in Dec. 2013 was $21.9 Mil. And its Long-Term Debt for the quarter that ended in Dec. 2013 was $46.0 Mil.

Calamos Asset Management, Inc.'s Interest Coverage for the quarter that ended in Dec. 2013 is

Interest Coverage=-1*Operating Income (Q: Dec. 2013 )/Interest Expense (Q: Dec. 2013 )
=-1*21.943/-1.505
=14.58

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

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

Calamos Asset Management, Inc.'s Debt to Revenue Ratio for the quarter that ended in Dec. 2013 is

Debt to Revenue Ratio=Total Debt (Q: Dec. 2013 ) / Revenue (Q: Dec. 2013 )
=(Current Portion of Long-Term Debt + Long-Term Debt) / Revenue
=(46.16 + 45.955) / 66.522
=1.38

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.

Calamos Asset Management, Inc. has a Z-score of 2.40, indicating it is in Grey Zones. This implies that Calamos Asset Management, Inc. is in some kind of financial stress. If it is below 1.81, the company may faces bankrupcy risk.

Warning Sign:

Altman Z-score of 2.40 is in grey area. The implies that the company is in some kind of financial stress. If it is below 1.8, the company may faces bankrupcy risk.

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.


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.

Calamos Asset Management, Inc. has the Financial Strength Rank of 8. It shows strong financial strength and is unlikely to fall into distressed situations.


Related Terms

Profitability Rank, Altman Z-score, Interest Coverage, Operating Income, Interest Expense, Current Portion of Long-Term Debt, Long-Term Debt, Revenue

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