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, Formula Systems (1985)'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.
Formula Systems (1985) (NAS:FORTY) 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.
Formula Systems (1985) Probability of Financial Distress (%) Related Terms
FORTY vs IBM, ACN, FISV: Probability of Financial Distress (%) Comparison
For the Information Technology Services subindustry, Formula Systems (1985)'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.
Formula Systems (1985) Probability of Financial Distress (%) vs Software Industry
For the Software industry and Technology sector, Formula Systems (1985)'s Probability of Financial Distress (%) distribution charts can be found below:
* The bar in red indicates where Formula Systems (1985)'s Probability of Financial Distress (%) falls into.
Formula Systems (1985) 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
=
-8.38
The Probability of Financial Distress (%) (PFD) was then obtianed by:
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).
What does a Probability of Financial Distress (%) of 0.02% mean?
Formula Systems (1985) (FORTY) has a Probability of Financial Distress (%) of 0.02% as of Jun. 24, 2026.
Is Formula Systems (1985)'s Probability of Financial Distress (%) too high?
Formula Systems (1985)'s current Probability of Financial Distress (%) is 0.02%. Overall, Formula Systems (1985) has a GF Score™ of 73/100 and is considered Modestly Undervalued, reflecting its overall financial health beyond just this single metric.
How does Formula Systems (1985)'s Probability of Financial Distress (%) compare to IBM and ACN?
Formula Systems (1985)'s Probability of Financial Distress (%) of 0.02% can be compared against companies in the Software industry. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good Probability of Financial Distress (%) for a Software company?
A good Probability of Financial Distress (%) depends on the Software industry context. However, Probability of Financial Distress (%) should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. Use the industry distribution chart on this page to see where any company falls relative to its peers.
What does a high Probability of Financial Distress (%) mean?
A high Probability of Financial Distress (%) can signal that a stock is expensive relative to its fundamentals. Formula Systems (1985)'s current Probability of Financial Distress (%) is 0.02%. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is Formula Systems (1985) stock overvalued right now?
Based on GuruFocus' analysis, Formula Systems (1985) (FORTY) is currently considered Modestly Undervalued. The stock's GF Value™ is $120.11, compared to a current price of $106.50 — trading 11.3% below its estimated fair value. The current Probability of Financial Distress (%) is 0.02%. Formula Systems (1985)'s overall GF Score™ is 73/100 with 4 warning signs to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is Probability of Financial Distress (%) calculated?
Probability of Financial Distress (%) is calculated from a company's financial statements. For Formula Systems (1985) (FORTY), the current Probability of Financial Distress (%) is 0.02% as of Jun. 24, 2026. GuruFocus calculates this using data sourced from SEC filings and annual reports. See the calculation section and 30-year financial data on this page for the full breakdown.
Is Formula Systems (1985) (FORTY) Overvalued in 2026?
Based on GuruFocus' analysis, Formula Systems (1985) stock appears to be undervalued.
The current stock price of $106.50 is trading 11.3% below its estimated GF Value™ of $120.11.
GuruFocus considers Formula Systems (1985) to be Modestly Undervalued.
Key valuation signals for FORTY:
Probability of Financial Distress (%): 0.02%
GF Value™: $120.11 vs. price of $106.50 (11.3% below fair value)
No single metric tells the full story. See the FORTY stock analysis page for a complete view including 30-year financials, guru trades, and insider activity.
Formula Systems (1985) Ltd is an information technology company that is principally engaged through its directly and indirectly held investees in providing software consulting services, selling and marketing computer-based business solutions and hardware products from a wide range of domestic and international manufacturers, as well as developing proprietary software solutions. It delivers solutions in Israel and in numerous countries to customers with complex IT services needs. It designs and implements IT solutions and software systems that improve the productivity of customers' existing IT assets, enable them to effectively manage their operations and reduce their business risks in the face of changing business environments.
73GF Score
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Probability of Financial Distress (%) is just one metric. See GF Value™, 30-year financials, guru trades, warning signs, and more.
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