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Toro Co (NYSE:TTC)
Altman Z-Score
5.66 (As of Today)

Toro Co has a Z-score of 5.69, 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.

TTC' s 10-Year Altman Z-Score Range
Min: 2.31   Max: 6.62
Current: 5.66

2.31
6.62

During the past 2 years, Toro Co's highest Altman Z-Score was 6.62. The lowest was 2.31. And the median was 4.20.


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.

Toro Co'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*0.2338+1.4*0.2887+3.3*0.1862+0.6*4.372+1.0*1.7666
=5.69

* 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 Apr. 2014:
Total Assets was $1,179 Mil.
Total Current Assets was $814 Mil.
Total Current Liabilities was $539 Mil.
Retained Earnings was $340 Mil.
Pretax Income was 129.116 + 38.755 + 9.345 + 57.653 = $235 Mil.
Interest Expense was -3.683 + -3.753 + -3.903 + -3.909 = $-15 Mil.
Revenue was 745.03 + 445.981 + 382.366 + 509.918 = $2,083 Mil.
Market Capitalization (Today) was $3,470 Mil.
Total Liabilities was $794 Mil.

X1=Working Capital/Total Assets
=(Total Current Assets - Total Current Liabilities)/Total Assets
=(814.354 - 538.626)/1179.246
=0.2338

X2=Retained Earnings/Total Assets
=340.482/1179.246
=0.2887

X3=Earnings Before Interest and Taxes/Total Assets
=(Pretax Income + Interest Expense)/Total Assets
=(234.869 + -15.248)/1179.246
=0.1862

X4=Market Value Equity/Book Value of Total Liabilities
=Market Capitalization/Total Liabilities
=3470.000/793.696
=4.372

X5=Revenue/Total Assets
=2083.295/1179.246
=1.7666

The zones of discrimination were as such:

Distress” Zones - 1.81 < “Grey” Zones < 2.99 - “Safe” Zones

Toro Co has a Z-score of 5.69 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.

Read more about Altman Z-score and the original research.


Be Aware

Z score does not apply to financial companies.


Related Terms

Total Assets, Total Current Assets, Total Current Liabilities, Retained Earnings, Pretax Income, Interest Expense, Revenue, Market Capitalization, Total Liabilities, Financial Strength


Historical Data

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

Toro Co Annual Data

Jul95Apr14
X1 0.3607
X2 0.2998
X3 0.1051
X4 1.3223
X5 1.9921
Z-score 3.98
Zones Safe Zones

Toro Co Quarterly Data

Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14
X1 0.20880.26040.25020.24220.26250.29390.26370.23030.23380.266
X2 0.28060.29390.28240.26830.29080.32580.31370.28710.28870
X3 0.1720.18690.19180.1960.18370.19710.20990.19850.18620.2066
X4 2.92443.4063.95023.79433.49574.31545.22955.12214.51510
X5 1.92792.01462.09442.01141.78711.9382.03581.96491.76661.8983
Z-score 4.895.405.795.605.215.996.626.375.772.90
Zones Safe ZonesSafe ZonesSafe ZonesSafe ZonesSafe ZonesSafe ZonesSafe ZonesSafe ZonesSafe ZonesGrey Zones
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