The Altman Z-Score is a model designed to predict the likelihood of a company going bankrupt within the next two years. Created by American finance professor Edward Altman in 1968, the model is specifically designed for publicly traded manufacturing companies with assets greater than $1 million.
EZChip Semiconductor has a Altman Z-Score of 19.29, indicating it is in Safe Zones. This implies the Altman Z-Score is strong.
The zones of discrimination were as such:
When Altman Z-Score <= 1.8, it is in Distress Zones.
When Altman Z-Score >= 3, it is in Safe Zones.
When Altman Z-Score is between 1.8 and 3, it is in Grey Zones.
The historical rank and industry rank for EZChip Semiconductor's Altman Z-Score or its related term are showing as below:
EZChip Semiconductor Altman Z-Score Historical Data
The historical data trend for EZChip Semiconductor's Altman Z-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 EZChip Semiconductor's Altman Z-Score
For the Semiconductors subindustry, EZChip Semiconductor's Altman Z-Score, along with its competitors' market caps and Altman Z-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.
EZChip Semiconductor's Altman Z-Score Distribution in the Semiconductors Industry
For the Semiconductors industry and Technology sector, EZChip Semiconductor's Altman Z-Score distribution charts can be found below:
* The bar in red indicates where EZChip Semiconductor's Altman Z-Score falls into.
EZChip Semiconductor Altman Z-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.
EZChip Semiconductor'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
*
0.5455
+
1.4
*
-0.0179
+
3.3
*
-0.013
+
0.6
*
30.6978
+
1.0
*
0.2863
=
19.29
* 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 Z-Score when X4 or X5 value is 0.
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.
Altman Z-Score does not apply to financial companies.
EZChip Semiconductor Altman Z-Score Related Terms
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EZChip Semiconductor (EZChip Semiconductor) Business Description
EZChip Semiconductor Ltd, formerly known as Dan-Serb Ltd., was incorporated as a limited liability company under the laws of the State of Israel in 1989. The Company along with its subsidiary is engaged in the development and marketing of Ethernet network processors for networking equipment. It provides its customers with solutions that scale from a few Gigabits per second to hundreds of Gigabits per second. Its network processors provide flexibility and performance coupled with superior integration and power efficiency for applications in carrier, data center, cloud and enterprise networking equipment. The Company designs and produces network processors for high-speed networking equipment, integrating several key functions into a single chip. Its products include: Network Processor Chips and Evaluation Boards and Network-processor Based Systems. The NP-2 is a single-chip, full-duplex, 10-Gigabit network processor. In addition to the integration of packet processing, classification search engines and MACs provided in the previous generation NP-1c, the NP-2 also includes traffic managers for improved QoS. Evaluation Boards and Network-processor Based Systems - Evaluation systems are usually required by customers to enable them to test their NPU-based systems. These systems also serve customers to differentiate themselves through software applications and are in need of high-performance packet processing hardware platforms for their software applications. Development Software Toolkits - EZdriver is a software development toolset with a graphical user interface for writing, testing and debugging programs for network processors to implement a range of applications and reduce time to market of next-generation networking products. It includes a hardware-software simulator, a compiler, debugger and other utilities. The Company's marketing communications activities include: seminar programs, guest speaker invitations and technical conferences; public relations activities and customer events; technical articles in industry publications and marketing collateral materials; and information exchange on the Internet. The Company also works with vendors of complementary technologies to provide its customers with interoperable solutions. It provides interoperability with devices from numerous semiconductor companies, including Broadcom, Marvell, PMC-Sierra and Zarlink. It holds four U.S. registered patents. The Company competes with all these vendors as well as with multi-core processors that target networking equipment from vendors, such as Broadcom, Cavium Networks and other smaller vendors.
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