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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, Duos Technologies Group's Probability of Financial Distress (%) is 0.77%.
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.
For the Software - Application subindustry, Duos Technologies Group'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.
For the Software industry and Technology sector, Duos Technologies Group's Probability of Financial Distress (%) distribution charts can be found below:
* The bar in red indicates where Duos Technologies Group's Probability of Financial Distress (%) falls into.
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 |
= | -4.86 |
The Probability of Financial Distress (%) (PFD) was then obtianed by:
PFD | = | 1 | / | (1 + e^(-LPFD)) | * | 100% |
= | 0.77% |
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
MB | = | Market Cap | / | Adjusted Book Equity |
= | Market Cap | / | (Total Stockholders Equity + 0.1 * ( Market Cap - Total Stockholders Equity)) |
8. PRICE
PRICE is measured as the log of the stock price, capped at log(15).
Duos Technologies Group (NAS:DUOT) 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.
Thank you for viewing the detailed overview of Duos Technologies Group's Probability of Financial Distress (%) provided by GuruFocus.com. Please click on the following links to see related term pages.
Frank A Lonegro | director | 500 WATER STREET, JACKSONVILLE FL 32202 |
James Craig Nixon | director | 7859 SOUTHDOWN ROAD, ALEXANDRIA VA 22308 |
Kenneth S Ehrman | director | C/O ID SYSTEMS INC, ONE UNIVERSITY PLAZA, HACKENSACK NJ 07601 |
Ned Mavrommatis | director | C/O ID SYSTEMS INC, ONE UNIVERSITY PLAZA, HACKENSACK NJ 07601 |
Andrew Winslow Murphy | officer: CFO | C/O DUOS TECHNOLOGIES, 7660 CENTURION PKWY, STE 100, JACKSONVILLE FL 32256 |
Adrian Graham Goldfarb | other: Former CFO | 7660 CENTURION PARKWAY, SUITE 100, JACKSONVILLE FL 32256 |
Norman H Pessin | 10 percent owner | C/O LEVY, HARKINS & CO., INC., 366 MADISON AVENUE, 14TH FLOOR, NEW YORK NY 10017 |
Charles Parker Ferry | director, officer: Chief Executive Officer | 6622 SOUTHPOINT DRIVE SOUTH, SUITE 310, JACKSONVILLE FL 32216 |
Bleichroeder Lp | 10 percent owner | 1345 AVENUE OF THE AMERICAS, 47TH FLOOR, NEW YORK NY 10105 |
Edmond L Harris | director | 500 WATER STREET, JACKSONVILLE FL 32202 |
Gianni B Arcaini | director, officer: Chairman & CEO | 6622 SOUTHPOINT DRIVE SOUTH, SUITE 310, JACKSONVILLE FL 32216 |
21 April Fund, Ltd. | 10 percent owner | Citco Fund Services (Cayman Islands) Ltd, Regatta Office Park West Bay Road, GRAND CAYMAN E9 KY1-1205 |
Brian L. Pessin | 10 percent owner | 310 EAST 75TH STREET, APT. 2A, NEW YORK NY 10021 |
Sandra F Pessin | 10 percent owner | C/O NORMAN PESSIN, 366 MADISON AVENUE, 14TH FLOOR, NEW YORK NY 10017 |
Weeks Connie L. | officer: Chief Accounting Officer | 6858 PLUM LAKE LN. E., JACKSONVILLE FL 32222 |
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