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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, Movella Holdings's Probability of Financial Distress (%) is 100.00%.
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, Movella Holdings'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, Movella Holdings's Probability of Financial Distress (%) distribution charts can be found below:
* The bar in red indicates where Movella Holdings'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 |
= | 86.72 |
The Probability of Financial Distress (%) (PFD) was then obtianed by:
PFD | = | 1 | / | (1 + e^(-LPFD)) | * | 100% |
= | 100.00% |
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).
Movella Holdings (OTCPK:MVLA) 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 Movella Holdings's Probability of Financial Distress (%) provided by GuruFocus.com. Please click on the following links to see related term pages.
Ben A Lee | director, officer: See Remarks | 3408 GARRETT DRIVE, SANTA CLARA CA 95054 |
Stephen M Smith | officer: Chief Financial Officer | |
Boele De Bie | officer: Chief Operating Officer | C/O MOVELLA INC., 2570 NORTH FIRST STREET, SUITE 300, SAN JOSE CA 95131 |
Industry Ventures Tech Buyout, Lp | 10 percent owner | 30 HOTALING PLACE, 3RD FLOOR, SAN FRANCISCO CA 94111 |
Fp Credit Partners Phoenix Ii, L.p. | 10 percent owner | ONE LETTERMAN DR, BUILDING C - STE 410, SAN FRANCISCO CA 94129 |
Fp Credit Partners Gp Ii, L.p. | 10 percent owner | ONE LETTERMAN DR, BUILDING C - STE 410, SAN FRANCISCO CA 94129 |
Fp Credit Partners Ii, L.p. | 10 percent owner | ONE LETTERMAN DR, BUILDING C - STE 410, SAN FRANCISCO CA 94129 |
Fp Credit Partners Gp Ii Management, Llc | 10 percent owner | ONE LETTERMAN DR, BUILDING C - STE 410, SAN FRANCISCO CA 94129 |
Iv Tech Buyout Gp, Llc | 10 percent owner | 1950 UNIVERSITY AVENUE, SUITE 350, PALO ALTO CA 94303 |
Arrowhead Holdings, Llc / New | 10 percent owner | 1950 UNIVERSITY AVENUE, SUITE 350, PALO ALTO CA 94303 |
Hggc Pathfinder Holdings I, Llc | 10 percent owner | 1950 UNIVERSITY AVENUE, SUITE 350, PALO ALTO CA 94303 |
Pathfinder Acquisition Llc | 10 percent owner | 1950 UNIVERSITY AVENUE, PALO ALTO CA 94303 |
Chung David H S | director | 10900 NE 8TH STREET, SUITE 800, BELLEVUE WA 98004 |
Eric Salzman | director | C/O 8X8 INC., 675 CREEKSIDE WAY, CAMPCALL CA 95008 |
Wen Hsuan Hsieh | director | C/O DESKTOP METAL, INC., 63 THIRD AVENUE, BURLINGTON MA 01803 |
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