Switch to:
Valspar Corp (NYSE:VAL)
Altman Z-Score
2.97 (As of Today)

Valspar Corp has a Z-score of 2.97, indicating it is in Grey Zones. This implies that Valspar Corp 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.

VAL' s 10-Year Altman Z-Score Range
Min: 2.19   Max: 6.54
Current: 2.97

2.19
6.54

During the past 13 years, Valspar Corp's highest Altman Z-Score was 6.54. The lowest was 2.19. And the median was 2.66.


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.

Valspar Corp'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*-0.0315+1.4*0+3.3*0.1381+0.6*2.3908+1.0*1.1211
=2.97

* 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. 2014:
Total Assets was $4,034 Mil.
Total Current Assets was $1,577 Mil.
Total Current Liabilities was $1,704 Mil.
Retained Earnings was $0 Mil.
Pretax Income was 145.045 + 140.58 + 127 + 79.257 = $492 Mil.
Interest Expense was -17.505 + -16.137 + -15.756 + -15.932 = $-65 Mil.
Revenue was 1233.065 + 1203.062 + 1130.178 + 956.119 = $4,522 Mil.
Market Capitalization (Today) was $7,227 Mil.
Total Liabilities was $3,023 Mil.

X1=Working Capital/Total Assets
=(Total Current Assets - Total Current Liabilities)/Total Assets
=(1577.257 - 1704.421)/4033.951
=-0.0315

X2=Retained Earnings/Total Assets
=0/4033.951
=0

X3=Earnings Before Interest and Taxes/Total Assets
=(Pretax Income + Interest Expense)/Total Assets
=(491.882 + -65.33)/4033.951
=0.1381

X4=Market Value Equity/Book Value of Total Liabilities
=Market Capitalization/Total Liabilities
=7227.050/3022.86
=2.3908

X5=Revenue/Total Assets
=4522.424/4033.951
=1.1211

The zones of discrimination were as such:

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

Valspar Corp has a Z-score of 2.97 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.

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.

Valspar Corp Annual Data

Oct05Oct06Oct07Oct08Oct09Oct10Oct11Oct12Oct13Oct14
X1 0.0877-0.07160.00010.04740.10.10340.01860.11650.0248-0.0315
X2 0.32210.31560.3210.33520.36160.36930.34910.39730.40960
X3 0.09890.09510.09310.08140.08220.0976-0.01190.13370.12140.1381
X4 1.3361.39571.21510.98721.25781.40631.4262.10222.06782.2039
X5 0.99330.93310.94120.98930.820.83421.12941.10861.01941.1211
Z-score 2.682.442.432.382.472.642.463.513.262.86
Zones Grey ZonesGrey ZonesGrey ZonesGrey ZonesGrey ZonesGrey ZonesGrey ZonesSafe ZonesSafe ZonesGrey Zones

Valspar Corp Quarterly Data

Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14
X1 0.12050.11650.10250.08320.07180.02480.00590.01060.0043-0.0315
X2 0.38210.39730.40630.40870.41770.40960.42190.42630.43550
X3 0.0140.13370.13390.12980.12940.12140.12330.1230.1210.1381
X4 1.87592.10222.44652.15392.16552.06782.0652.00962.03492.2039
X5 1.11551.10861.10461.06981.04591.01941.05071.04681.05211.1211
Z-score 2.973.513.713.463.443.263.293.273.292.86
Zones Grey ZonesSafe ZonesSafe ZonesSafe ZonesSafe ZonesSafe ZonesSafe ZonesSafe ZonesSafe ZonesGrey Zones
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK