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ARCH (Arch Resources) Probability of Financial Distress (%) : 0.03% (As of Dec. 15, 2024)


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What is Arch Resources Probability of Financial Distress (%)?

Probability of Financial Distress (%) measures the probability that a company will go bankrupt in the upcoming year given its current financial position. A higher ratio indicates a larger probability of bankruptcy for the company, while a lower ratio indicates a healthier fundamental. As of today, Arch Resources's Probability of Financial Distress (%) is 0.03%.

Like the Altman Z-Score, the PFD measures a company's bankruptcy risk. However, the main drawback of the Z-score is it does not apply to banks and insurance companies. According to Investopedia, the concept of "working capital" does not apply to banks and insurance companies, as financial institutions do not have typical current assets or current liabilities like inventories or accounts payable.


Competitive Comparison of Arch Resources's Probability of Financial Distress (%)

For the Coking Coal subindustry, Arch Resources's Probability of Financial Distress (%), along with its competitors' market caps and Probability of Financial Distress (%) data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.


Arch Resources's Probability of Financial Distress (%) Distribution in the Steel Industry

For the Steel industry and Basic Materials sector, Arch Resources's Probability of Financial Distress (%) distribution charts can be found below:

* The bar in red indicates where Arch Resources's Probability of Financial Distress (%) falls into.



Arch Resources Probability of Financial Distress (%) Calculation

Probability of Financial Distress (%) (PFD) was developed by John Campbell, Jens Hilscher and Jan Szilagyi in their Search of Distress Risk. It measures the probability that a company will go bankrupt within the next 12 months given its current financial position.

The Probability of Financial Distress (%) was obtained by a logit probability model based on eight explanatory variables. The logit formula to compute the probability of financial distress (LPFD) is given below:

LPFD= -20.12 * NIMTAAVG + 1.60 * TLMTA - 7.88 * EXRETAVG + 1.55 * SIGMA - 0.005 * RSIZE - 2.27 * CASHMTA + 0.070 * MB - 0.09 * PRICE -8.87
=-8.24

The Probability of Financial Distress (%) (PFD) was then obtianed by:

PFD=1/(1 + e^(-LPFD))*100%
=0.03%

The eight explanatory variables are:

1. NIMTAAVG = Net Income to Market Total Assets

NIMTAAVG=Net Income / Market Total Assets
=Net Income / (Market Cap + Total Liabilities)

*Note that for companies reported quarterly, geometrically declining weighted quarterly Net Income data in latest four quarters are used.

2. TLMTA = Total liabilities to Market Total Assets

TLMTA=Total Liabilities / Market Total Assets

3. CASHMTA = Cash to Market Total Assets

For non-financial companies, CASHMTA is measured as:

CASHMTA=Cash, Cash Equivalents, Marketable Securities / Market Total Assets

4. EXRETAVG = Excess Return compared to the S&P 500

EXRETAVG is the weighted excess return compared to the S&P 500 in past 12 month. Geometrically declining weights are imposed on the monthly excess return to reflect lagged information. The weight is halved each quarter.

5. SIGMA = Standard Deviation of Daily Returns

For sigma, we use the annualized standard deviation of a company's returns over the past 92 days (or 63 trading days).

6. RSIZE = Relative Size

RSIZE=log (Market Cap / Total Market Cap of S&P 500 companies)

7. MB = Market to Adjusted Book Equity Ratio


8. PRICE

PRICE is measured as the log of the stock price, capped at log(15).


Arch Resources  (NYSE:ARCH) Probability of Financial Distress (%) Explanation

Like the Altman Z-Score, the PFD measures a company's bankruptcy risk in the upcoming year. However, the main drawback of the Z-score is it does not apply to banks and insurance companies. According to Investopedia, the concept of "working capital" does not apply to banks and insurance companies, as financial institutions do not have typical current assets or current liabilities like inventories or accounts payable.


Arch Resources Probability of Financial Distress (%) Related Terms

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Arch Resources Business Description

Industry
GURUFOCUS.COM » STOCK LIST » Basic Materials » Steel » Arch Resources Inc (NYSE:ARCH) » Definitions » Probability of Financial Distress (%)
Traded in Other Exchanges
Address
1 CityPlace Drive, Suite 300, Saint Louis, MO, USA, 63141
Arch Resources Inc is a producer of metallurgical and coking coal. The company sells its coal to power plants, steel mills, and industrial facilities. Its operating segment includes Metallurgical (MET) and Thermal. It generates maximum revenue from the Metallurgical (MET) segment. Geographically, it derives a majority of its revenue from Asia.
Executives
Deck Slone officer: Sr. VP - Strategy & Public Pol ONE CITYPLACE DRIVE, ST. LOUIS MO 63141
Matthew C. Giljum officer: Sr. VP and CFO C/O ARCH COAL, INC., ONE CITYPLACE DRIVE, SUITE 300, ST. LOUIS MO 63141
Pamela R Butcher director P. O. BOX 116, ELK RAPIDS MI 49629
John W Eaves director, officer: Chief Executive Officer 1 CITYPLACE ONE STE 300, ST LOUIS MO 63141
James N Chapman director 14 ALPINE ROAD, GREENWICH CT 06830
John A. Ziegler officer: Chief Commercial Officer ONE CITYPLACE DRIVE, SUITE 300, ST. LOUIS MO 63141
Paul T. Demzik officer: Chief Commercial Officer ONE CITYPLACE DRIVE, SUITE 300, ST. LOUIS MO 63141
John W Lorson officer: Controller CITYPLACE ONE SUITE 300, ARCH MINERAL CORP, CREVE COEUR MO 63141
Rosemary L Klein officer: Sr. VP, General Counsel & Sec 575 MARYVILLE CENTRE DRIVE, ST. LOUIS MO 63141
Bartels Patrick J Jr director C/O WCI COMMUNITIES, INC., 24301 WALDEN CENTER DRIVE, BONITA SPRINGS FL 34134
Peifang Zhang director 21640 E. BRIARWOOD DR., AURORA CO 80016
Robert B. Hamill director ONE CITYPLACE DRIVE, SUITE 300, ST. LOUIS MO 63141
Holly K Koeppel director 401 NORTH MAIN STREET, WINSTON-SALEM NC 27101
Paul A Lang officer: President & COO ONE CITYPLACE DRIVE, SUITE 300, ST. LOUIS MO 63141
John T. Drexler officer: Sr. V.P. and CFO ONE CITY PLACE DRIVE, SUITE 300, ST. LOUIS MO 63141