Altman Z2-Score, also known as Z"-Score, is used to predict the likelihood that a non-manufacturing company (excluding property/financial company) will face bankruptcy within a two-year period.
The Kraft Heinz Co has a Altman Z2-Score of 1.66, indicating it is in Grey Zones. This implies that The Kraft Heinz Co is in some kind of financial stress. If it is below 1.1, the company may face bankrupcy risk.
The zones of discrimination were as such:
When Altman Z2-Score <= 1.1, it is in Distress Zones.
When Altman Z2-Score >= 2.6, it is in Safe Zones.
When Altman Z2-Score is between 1.1 and 2.6, it is in Grey Zones.
The historical rank and industry rank for The Kraft Heinz Co's Altman Z2-Score or its related term are showing as below:
KHC'
s Altman Z2-Score Range Over the Past 10 Years
Min: 0.34 Med: 1.35 Max: 1.72
Current: 1.66
During the past 13 years, The Kraft Heinz Co's highest Altman Z2-Score was 1.72. The lowest was 0.34. And the median was 1.35.
The Kraft Heinz Co Altman Z2-Score Historical Data
The historical data trend for The Kraft Heinz Co's Altman Z2-Score can be seen below:
* 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.
Competitive Comparison of The Kraft Heinz Co's Altman Z2-Score
For the Packaged Foods subindustry, The Kraft Heinz Co's Altman Z2-Score, along with its competitors' market caps and Altman Z2-Score 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.
The Kraft Heinz Co's Altman Z2-Score Distribution in the Consumer Packaged Goods Industry
For the Consumer Packaged Goods industry and Consumer Defensive sector, The Kraft Heinz Co's Altman Z2-Score distribution charts can be found below:
* The bar in red indicates where The Kraft Heinz Co's Altman Z2-Score falls into.
The Kraft Heinz Co Altman Z2-Score Calculation
Altman 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.
Z2-Score, also known as Z"-Score is the Z-Score for non-manufacturing companies excluding property/financial companies.
The Kraft Heinz Co's Altman Z2-Score for today is calculated with this formula:
Z
=
6.56
*
X1
+
3.26
*
X2
+
6.72
*
X3
+
1.05
*
X4_2
=
6.56
*
-0.0012
+
3.26
*
0.0151
+
6.72
*
0.0503
+
1.05
*
1.2193
=
1.66
* 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. GuruFocus does not calculate Altman Z2-Score when X4_2 value is 0.
Distress Zones - 1.1 < Grey Zones < 2.6 - Safe Zones
The Kraft Heinz Co has a Altman Z2-Score of 1.66 indicating it is in Grey Zones.
The Kraft Heinz Co (NAS:KHC) Altman Z2-Score Explanation
The original Z-Score model was based on publicly traded manufacturing companies while the Z2-Score, also known as Z"-score can be used for any type of company excluding property/financial companies. Both Z-Score and Z2-Score describes the financial health of a company, and its likelihood of financial distress.
X1: The Working Capital/Total Assets (WC/TA) ratio is a measure of the net liquid assets of the firm relative to the total capitalization. Working capital is defined as the difference between current assets and current liabilities. Ordinarily, a firm experiencing consistent operating losses will have shrinking current assets in relation to total assets. Altman found this one proved to be the most valuable liquidity ratio comparing with the current ratio and the quick ratio. This is however the least significant of the five factors.
X2: Retained Earnings/Total Assets: the RE/TA ratio measures the leverage of a firm. Retained earnings is the account which reports the total amount of reinvested earnings and/or losses of a firm over its entire life. Those firms with high RE, relative to TA, have financed their assets through retention of profits and have not utilized as much debt.
X3, Earnings Before Interest and Taxes/Total Assets (EBIT/TA): This ratio is a measure of the true productivity of the firm's assets, independent of any tax or leverage factors. Since a firm's ultimate existence is based on the earning power of its assets, this ratio appears to be particularly appropriate for studies dealing with corporate failure. This ratio continually outperforms other profitability measures, including cash flow.
Altman Z2-Score does not apply to financial companies.
The Kraft Heinz Co Altman Z2-Score Related Terms
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The Kraft Heinz Co (The Kraft Heinz Co) Business Description
In July 2015, Kraft merged with Heinz to create the third-largest food and beverage manufacturer in North America behind PepsiCo and Nestle and the fifth-largest player in the world. Beyond its namesake brands, the combined firm's portfolio includes Oscar Mayer, Velveeta, and Philadelphia. While the retail channel drives around 85% of its total sales, the firm operates a growing presence in the foodservice arena. Outside North America, Kraft Heinz's global reach counts a distribution network in Europe and emerging markets that drives 20%-25% of its consolidated sales base, as its products are sold in more than 190 countries and territories.
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