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W.W. Grainger Inc (NYSE:GWW)
Altman Z-Score
6.60 (As of Today)

W.W. Grainger Inc has a Z-score of 6.60, 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.

GWW' s Altman Z-Score Range Over the Past 10 Years
Min: 5.09   Max: 10.28
Current: 6.5

5.09
10.28

During the past 13 years, W.W. Grainger Inc's highest Altman Z-Score was 10.28. The lowest was 5.09. And the median was 7.75.

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.

W.W. Grainger Inc'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 * 0.2706 + 1.4 * 1.2107 + 3.3 * 0.199 + 0.6 * 3.6667 + 1.0 * 1.7237 = 6.6

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Trailing Twelve Months (TTM) ended in Sep. 2016:
Total Assets was \$5,886 Mil.
Total Current Assets was \$3,129 Mil.
Total Current Liabilities was \$1,536 Mil.
Retained Earnings was \$7,126 Mil.
Pretax Income was 293.185 + 282.98 + 297.584 + 234.933 = \$1,109 Mil.
Interest Expense was -18.024 + -16.806 + -13.725 + -13.852 = \$-62 Mil.
Revenue was 2596.288 + 2563.668 + 2506.538 + 2478.258 = \$10,145 Mil.
Market Capitalization (Today) was \$14,091 Mil.
Total Liabilities was \$3,843 Mil.

 X1 = Working Capital / Total Assets = (Total Current Assets - Total Current Liabilities) / Total Assets = (3129.192 - 1536.311) / 5885.509 = 0.2706

 X2 = Retained Earnings / Total Assets = 7125.727 / 5885.509 = 1.2107

 X3 = Earnings Before Interest and Taxes / Total Assets = (Pretax Income + Interest Expense) / Total Assets = (1108.682 + -62.407) / 5885.509 = 0.199

 X4 = Market Value Equity / Book Value of Total Liabilities = Market Capitalization / Total Liabilities = 14090.570 / 3842.796 = 3.6667

 X5 = Revenue / Total Assets = 10144.752 / 5885.509 = 1.7237

The zones of discrimination were as such:

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

W.W. Grainger Inc has a Z-score of 6.60 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 local exchange's currency.

W.W. Grainger Inc Annual Data

 Dec06 Dec07 Dec08 Dec09 Dec10 Dec11 Dec12 Dec13 Dec14 Dec15 X1 0.3794 0.3149 0.3932 0.3636 0.3506 0.2771 0.3631 0.351 0.3229 0.2151 X2 0.9874 1.072 1.0442 1.0645 1.1082 1.0191 1.0526 1.1056 1.1993 1.1612 X3 0.1986 0.2213 0.2241 0.1922 0.2208 0.2249 0.2261 0.247 0.2545 0.2192 X4 6.7703 6.9389 3.9792 4.479 5.6393 6.2741 7.0632 8.7235 8.2903 3.4994 X5 1.9315 2.0743 1.9486 1.6697 1.8395 1.7129 1.7848 1.7921 1.8862 1.7026 Z-score 8.49 8.85 7.01 6.92 7.92 7.98 8.68 9.81 9.77 6.41 Zones Safe Zones Safe Zones Safe Zones Safe Zones Safe Zones Safe Zones Safe Zones Safe Zones Safe Zones Safe Zones

W.W. Grainger Inc Quarterly Data

 Jun14 Sep14 Dec14 Mar15 Jun15 Sep15 Dec15 Mar16 Jun16 Sep16 X1 0.3585 0.3542 0.3229 0.3165 0.425 0.2679 0.2151 0.211 0.2597 0.2706 X2 1.1496 1.1756 1.1993 1.2423 1.1353 1.1589 1.1612 1.1595 1.1758 1.2107 X3 0.2449 0.2512 0.2545 0.257 0.2318 0.2237 0.2192 0.2089 0.2 0.199 X4 8.9327 8.8886 8.2903 7.5941 5.5638 3.9178 3.4994 3.8712 3.5841 3.4854 X5 1.8202 1.8457 1.8862 1.9227 1.7223 1.7231 1.7026 1.6832 1.6901 1.7237 Z-score 10.03 10.08 9.77 9.45 7.92 6.76 6.41 6.57 6.46 6.49 Zones Safe Zones Safe Zones Safe Zones Safe Zones Safe Zones Safe Zones Safe Zones Safe Zones Safe Zones Safe Zones
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