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Spartech Corporation (NYSE:SEH)
Altman Z-Score
2.87 (As of Today)

Spartech Corporation has a Z-score of 2.87, indicating it is in Grey Zones. This implies that Spartech Corporation is in some kind of financial stress. If it is below 1.81, the company may faces bankrupcy risk.

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.

Spartech Corporation'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 * 0.1479 + 1.4 * -0.0155 + 3.3 * 0.0175 + 0.6 * 0.9081 + 1.0 * 2.1103 = 2.87

* 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 Oct. 2012:
Total Assets was \$545 Mil.
Total Current Assets was \$284 Mil.
Total Current Liabilities was \$204 Mil.
Retained Earnings was \$-8 Mil.
Pretax Income was -0.294 + 1.959 + 5.62 + -3.546 = \$4 Mil.
Interest Expense was -2.745 + 0 + 0 + -3.02 = \$-6 Mil.
Revenue was 286.804 + 282.447 + 298.323 + 281.781 = \$1,149 Mil.
Market Capitalization (Today) was \$331 Mil.
Total Liabilities was \$365 Mil.

 X1 = Working Capital / Total Assets = (Total Current Assets - Total Current Liabilities) / Total Assets = (284.226 - 203.661) / 544.633 = 0.1479

 X2 = Retained Earnings / Total Assets = -8.435 / 544.633 = -0.0155

 X3 = Earnings Before Interest and Taxes / Total Assets = (Pretax Income + Interest Expense) / Total Assets = (3.739 + -5.765) / 544.633 = 0.0175

 X4 = Market Value Equity / Book Value of Total Liabilities = Market Capitalization / Total Liabilities = 331.142 / 364.648 = 0.9081

 X5 = Revenue / Total Assets = 1149.355 / 544.633 = 2.1103

The zones of discrimination were as such:

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

Spartech Corporation has a Z-score of 2.87 indicating it is in Grey 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.

Spartech Corporation Annual Data

 Oct03 Oct04 Oct05 Oct06 Oct07 Oct08 Oct09 Oct10 Oct11 Oct12 X1 0.1073 0.1927 0.1535 0.1296 0.1213 0.1061 0.1183 0.1638 0.1471 0.1479 X2 0.2095 0.1915 0.2019 0.2308 0.2314 0.0703 0.0924 0.0174 -0.0201 -0.0155 X3 0.0743 0.0807 0.0447 0.0831 0.0657 -0.299 0.04 -0.1072 -0.0387 0.0287 X4 1.1546 1.1524 0.9268 1.4787 0.7377 0.3629 0.6996 0.6725 0.3304 0.7253 X5 1.0439 0.9757 1.3001 1.426 1.3071 1.8348 1.4178 1.7724 2.0053 2.1103 Z-score 2.40 2.43 2.47 3.07 2.44 1.29 2.24 2.04 2.22 2.80 Zones Grey Zones Grey Zones Grey Zones Safe Zones Grey Zones Distress Zones Grey Zones Grey Zones Grey Zones Grey Zones

Spartech Corporation Quarterly Data

 Jul10 Oct10 Jan11 Apr11 Jul11 Oct11 Jan12 Apr12 Jul12 Oct12 X1 0.142 0.1638 0.17 0.1825 0.1802 0.1471 0.1733 0.1658 0.1573 0.1479 X2 0.1032 0.0174 0.0193 0.0229 0.0282 -0.0201 -0.0244 -0.0057 -0.0145 -0.0155 X3 0.0222 -0.1072 -0.1228 -0.1194 -0.1005 -0.0387 -0.0367 -0.0383 -0.0518 0.0175 X4 0.8256 0.673 0.6743 0.5522 0.4539 0.3314 0.4435 0.3907 0.4371 0.727 X5 1.5183 1.7724 1.7991 1.7543 1.8045 2.0053 2.1113 2.077 2.1517 2.1103 Z-score 2.40 2.04 2.03 1.94 2.00 2.22 2.43 2.38 2.41 2.76 Zones Grey Zones Grey Zones Grey Zones Grey Zones Grey Zones Grey Zones Grey Zones Grey Zones Grey Zones Grey Zones
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