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Altman Z-score of 0.69 is in distress zone. This implies bankrupcy possibility in the next two years.
Fifth Street Finance Corporation has a Z-score of 0.68, indicating it is in Distress Zones. This implies bankrupcy possibility in the next two years.
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.
During the past 7 years, Fifth Street Finance Corporation's highest Altman Z-Score was 49.10. The lowest was 0.20. And the median was 1.51.
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.
Fifth Street Finance Corporation's Altman Z-Score for today is calculated with this formula:
Trailing Twelve Months (TTM) ended in Mar. 2015:
Total Assets was $2,728.0 Mil.
Total Current Assets was $0.0 Mil.
Total Current Liabilities was $0.0 Mil.
Retained Earnings was $-21.7 Mil.
Pretax Income was 25.406 + -30.661 + 28.439 + 20.287 = $43.5 Mil.
Interest Expense was -14.812 + -13.992 + -13.683 + -14.737 = $-57.2 Mil.
Revenue was 53.338 + 62.3 + 62.536 + 59.537 = $237.7 Mil.
Market Capitalization (Today) was $1,070.3 Mil.
Total Liabilities was $1,320.2 Mil.
|X1||=||Working Capital||/||Total Assets|
|=||(Total Current Assets - Total Current Liabilities)||/||Total Assets|
|=||(0 - 0)||/||2727.963|
|X3||=||Earnings Before Interest and Taxes||/||Total Assets|
|=||(Pretax Income + Interest Expense)||/||Total Assets|
|=||(43.471 + -57.224)||/||2727.963|
|X4||=||Market Value Equity||/||Book Value of Total Liabilities|
|=||Market Capitalization||/||Total Liabilities|
The zones of discrimination were as such:
Distress Zones - 1.81 < Grey Zones < 2.99 - Safe Zones
Fifth Street Finance Corporation has a Z-score of 0.68 indicating it is in Distress Zones.
Study by Altman found that companies that are in Distress Zone have more than 80% of chances of bankruptcy in two years.
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 firms 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 firms assets can decline in value (measured by market value of equity plus debt) before the liabilities exceed the assets and the firm becomes insolvent.
Z score does not apply to financial companies.
Fifth Street Finance Corporation Annual Data
|Zones||Safe Zones||Safe Zones||Safe Zones||Distress Zones||Distress Zones||Distress Zones||Distress Zones|
Fifth Street Finance Corporation Quarterly Data
|Zones||Distress Zones||Distress Zones||Distress Zones||Distress Zones||Distress Zones||Distress Zones||Distress Zones||Distress Zones||Distress Zones||Distress Zones|