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Chipotle Mexican Grill (NYSE:CMG) Probability of Financial Distress (%)

: 0.02% (As of Today)
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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, Chipotle Mexican Grill's Probability of Financial Distress (%) is 0.02%.

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

For the Restaurants subindustry, Chipotle Mexican Grill'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.


Chipotle Mexican Grill Probability of Financial Distress (%) Distribution

For the Restaurants industry and Consumer Cyclical sector, Chipotle Mexican Grill's Probability of Financial Distress (%) distribution charts can be found below:

* The bar in red indicates where Chipotle Mexican Grill's Probability of Financial Distress (%) falls into.



Chipotle Mexican Grill 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
=-8.41

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

PFD=1/(1 + e^(-LPFD))*100%
=0.02%

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).


Chipotle Mexican Grill  (NYSE:CMG) 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.


Chipotle Mexican Grill Probability of Financial Distress (%) Related Terms

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Chipotle Mexican Grill (NYSE:CMG) Business Description

Traded in Other Exchanges
Address
610 Newport Center Drive, Suite 1100, Newport Beach, CA, USA, 92660
Chipotle Mexican Grill is the largest fast-casual chain restaurant in the United States, with systemwide sales of $8.6 billion in 2022. The Mexican concept is predominately company-owned (it recently inked a development agreement with Alshaya Group in the Middle East), with a footprint of nearly 3,200 stores at the end of 2022, heavily indexed to the United States, although the firm maintains a small presence in Canada, the U.K., France, and Germany. Chipotle sells burritos, burrito bowls, tacos, quesadillas, and beverages, with a selling proposition built around competitive prices, high-quality food sourcing, speed of service, and convenience. The company generates its revenue entirely from restaurant sales and delivery fees.
Executives
Brian R Niccol director, officer: Chairman, CEO 1 GLEN BELL WAY, IRVINE CA 92618
Gregg L Engles director 1225 SEVENTEENTH STREET, SUITE 1000, DENVER CO 80202
Scott Boatwright officer: Chief Restaurant Officer 1401 WYNKOOP STREET, SUITE 500, DENVER CO 80202
Robin S Hickenlooper director 12300 LIBERTY BOULEVARD, ENGLEWOOD CO 80112
Laurie Schalow officer: Chief Corp Affairs, Food Sft 610 NEWPORT CENTER DRIVE, SUITE 1300, NEWPORT BEACH CA 92660
Curtis E Garner officer: Chief Technology Officer C/O AEROHIVE NETWORKS, INC., 330 GIBRALTAR DRIVE, SUNNYVALE CA 94089
Christopher W Brandt officer: Chief Marketing Officer 2202 NORTH WESTSHORE BLVD, TAMPA FL 33607
Patricia Filikrushel director DOLLAR GENERAL CORPORATION, 100 MISSION RIDGE, GOODLETTSVILLE TN 37072
Laura Fuentes director 7930 JONES BRANCH DRIVE, MCLEAN VA 22102
Albert S Baldocchi director 1601 HIGH STREET, BOULDER CO 80304
Marissa Andrada officer: Chief D&I and People Officer C/O KATE SPADE & COMPANY 2 PARK AVENUE, NEW YORK NY 10016
Roger E Theodoredis officer: Chief Legal Officer & GC 1225 SEVENTEENTH STREET, SUITE 1000, DENVER CO 80202
Pershing Square Capital Management, L.p. director 787 11TH AVENUE, 9TH FLOOR, NEW YORK NY 10019
Jack Hartung officer: CFO & Chief Development Ofcr 1543 WAZEE STREET, SUITE 200, DENVER CO 80202
Scott Harlan Maw director 1411 E. MISSION AVENUE, SPOKANE WA 99202