Switch to:
Equal Energy Ltd (NYSE:EQU)
Altman Z-Score
3.05 (As of Today)

Equal Energy Ltd has a Z-score of 3.05, indicating it is in Safe Zones. This implies the Z-Score is strong.

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.

Definition

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.

Equal Energy Ltd's Altman Z-Score for today is calculated with this formula:

 Z = 1.2 * X1 + 1.4 * X2 + 3.3 * X3 + 0.6 * X4 + 1.0 * X5 = 1.2 * 0.0926 + 1.4 * 0.1795 + 3.3 * 0.0992 + 0.6 * 3.4198 + 1.0 * 0.3094 = 3.05

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

Trailing Twelve Months (TTM) ended in Mar. 2014:
Total Assets was \$227.49 Mil.
Total Current Assets was \$33.43 Mil.
Total Current Liabilities was \$12.36 Mil.
Retained Earnings was \$40.83 Mil.
Pretax Income was 7.905 + 2.917 + 1.945 + 6.235 = \$19.00 Mil.
Interest Expense was -0.879 + -0.92 + -0.85 + -0.926 = \$-3.58 Mil.
Revenue was 20.084 + 15.382 + 16.592 + 18.329 = \$70.39 Mil.
Market Capitalization (Today) was \$196.70 Mil.
Total Liabilities was \$57.52 Mil.

 X1 = Working Capital / Total Assets = (Total Current Assets - Total Current Liabilities) / Total Assets = (33.426 - 12.36) / 227.491 = 0.0926

 X2 = Retained Earnings / Total Assets = 40.828 / 227.491 = 0.1795

 X3 = Earnings Before Interest and Taxes / Total Assets = (Pretax Income + Interest Expense) / Total Assets = (19.002 + -3.575) / 227.491 = 0.0992

 X4 = Market Value Equity / Book Value of Total Liabilities = Market Capitalization / Total Liabilities = 196.700 / 57.518 = 3.4198

 X5 = Revenue / Total Assets = 70.387 / 227.491 = 0.3094

The zones of discrimination were as such:

Distress Zones - 1.81 < Grey Zones < 2.99 - Safe Zones

Equal Energy Ltd has a Z-score of 3.05 indicating it is in Safe Zones.

Study by Altman found that companies that are in Distress Zone have more than 80% of chances of bankruptcy in two years.

Explanation

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.

X4, Market Value of Equity/Book Value of Total Liabilities (MVE/TL): The measure shows how much the firms assets can decline in value (measured by market value of equity plus debt) before the liabilities exceed the assets and the firm becomes insolvent.

X5, Revenue/Total Assets (S/TA): The capital-turnover ratio is a standard financial ratio illustrating the sales generating ability of the firms assets.

Be Aware

Z score does not apply to financial companies.

Related Terms

Historical Data

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

Equal Energy Ltd Annual Data

 Dec04 Dec05 Dec06 Dec07 Dec08 Dec09 Dec10 Dec11 Dec12 Dec13 X1 -0.1915 -0.1838 -0.2372 -0.2921 -0.1048 0.0621 -0.0371 0.0336 0.1157 0.0548 X2 0.1244 0.0466 -0.3027 -0.6892 -0.6922 -0.9683 -0.1084 -0.337 0.1505 0.1538 X3 0.0752 -0.0189 -0.1128 -0.2591 0.05 -0.1026 -0.0741 0.0685 0.1935 0.06 X4 9.6897 3.8383 2.0601 0.3608 0.2726 0.5564 0.6857 0.673 1.9295 2.9682 X5 0.4897 0.2585 0.3073 0.3452 0.4693 0.2744 0.3636 0.2424 0.283 0.2709 Z-score 6.50 2.34 0.46 -1.61 -0.30 -1.01 0.33 0.44 2.43 2.53 Zones Safe Zones Grey Zones Distress Zones Distress Zones Distress Zones Distress Zones Distress Zones Distress Zones Grey Zones Grey Zones

Equal Energy Ltd Quarterly Data

 Jun11 Sep11 Dec11 Mar12 Dec12 Mar13 Jun13 Sep13 Dec13 Mar14 X1 -0.0008 -0.0616 0.0336 0.0166 0.1157 0.0996 0.0894 0.0762 0.0548 0.0926 X2 -0.0815 -0.0785 -0.337 -0.1238 0.1505 0.1563 0.1675 0.1566 0.1538 0.1795 X3 -0.05 -0.0415 0.0704 0.0708 0.0849 0.0737 0.0556 0.0424 0.06 0.0992 X4 0.9016 0.5351 0.7296 0.5824 1.8909 2.1347 2.2599 2.6154 2.9682 2.8745 X5 0.2961 0.3194 0.2592 0.1557 0.1498 -0.0138 0.2767 0.2691 0.2708 0.3094 Z-score 0.56 0.32 0.50 0.59 1.91 1.85 2.16 2.29 2.53 2.72 Zones Distress Zones Distress Zones Distress Zones Distress Zones Grey Zones Grey Zones Grey Zones Grey Zones Grey Zones Grey Zones
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to \$400 per referral. ( Learn More)