GURUFOCUS.COM » STOCK LIST » Consumer Cyclical » Manufacturing - Apparel & Accessories » Cosmo Lady (China) Holdings Co Ltd (HKSE:02298) » Definitions » Probability of Financial Distress (%)

Cosmo Lady (China) Holdings Co (HKSE:02298) Probability of Financial Distress (%) : 0.04% (As of Mar. 26, 2025)


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What is Cosmo Lady (China) Holdings Co 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, Cosmo Lady (China) Holdings Co's Probability of Financial Distress (%) is 0.04%.

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 Cosmo Lady (China) Holdings Co's Probability of Financial Distress (%)

For the Apparel Manufacturing subindustry, Cosmo Lady (China) Holdings Co'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.

Cosmo Lady (China) Holdings Co's Probability of Financial Distress (%) Distribution in the Manufacturing - Apparel & Accessories Industry

For the Manufacturing - Apparel & Accessories industry and Consumer Cyclical sector, Cosmo Lady (China) Holdings Co's Probability of Financial Distress (%) distribution charts can be found below:

* The bar in red indicates where Cosmo Lady (China) Holdings Co's Probability of Financial Distress (%) falls into.


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Cosmo Lady (China) Holdings Co 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
=-7.75

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

PFD=1/(1 + e^(-LPFD))*100%
=0.04%

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).

Cosmo Lady (China) Holdings Co  (HKSE:02298) 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.

Cosmo Lady (China) Holdings Co Probability of Financial Distress (%) Related Terms

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Cosmo Lady (China) Holdings Co Business Description

Industry
GURUFOCUS.COM » STOCK LIST » Consumer Cyclical » Manufacturing - Apparel & Accessories » Cosmo Lady (China) Holdings Co Ltd (HKSE:02298) » Definitions » Probability of Financial Distress (%)
Comparable Companies
HKSE:00608 HKSE:01906 HKSE:02011 HKSE:08107 HKSE:01346 HKSE:00918 HKSE:01520 HKSE:02030 HKSE:03398 HKSE:01247 OSTO:HM B MIL:MONC RL VFC WAR:LPP TSX:GIL LEVI HKSE:03998 BOM:532827 COLM
Traded in Other Exchanges
N/A
Address
Fenggang Tianan Digital City, Building N1, Fenggang Town, Guangdong, Dongguan, CHN
Website
https://www.cosmo-lady.com.hk
Cosmo Lady (China) Holdings Co Ltd manufactures intimate wear apparel such as bras, underpants, sleepwear, loungewear, and thermal clothes. The company targets both the mass market and the high-end market with its brands that include Cosmo, Secret of City Beauty, Freeday, Mayajia, Ordifen, Rubii, and Ilsee. More than half of the company's sales are to franchisees that operate company outlet stores. The remaining sales are direct to consumers through Cosmo's self-managed company outlets and e-commerce sales. Women's apparel accounts for the vast majority of the company's total sales, and all sales are generated in China.
Executives
Zheng Yaonan 2202 Interest of your spouse
Wu Xiaoli 2101 Beneficial owner
Pandanus Partners L.p. 2201 Interest of corporation controlled by you
Pandanus Associates Inc. 2201 Interest of corporation controlled by you
Fil Limited 2201 Interest of corporation controlled by you
Fidelity China Special Situations Plc 2101 Beneficial owner
Tmf (cayman) Ltd. 2301 Trustee
Cai Shaoru 2202 Interest of your spouse
Forever Flourish International Holdings Limited 2101 Beneficial owner
Zhang Shengfeng 2201 Interest of corporation controlled by you
Lin Zonghong 2101 Beneficial owner
Cai Jingqin 2202 Interest of your spouse
Hong Ye Asset Holdings Limited 2201 Interest of corporation controlled by you
Great Brilliant Investment Holdings Limited 2201 Interest of corporation controlled by you
Forever Shine Holdings Limited 2101 Beneficial owner

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