What is Apple 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, Apple's Probability of Financial Distress (%) is 0.03%.
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 Apple's Probability of Financial Distress (%)
For the Consumer Electronics subindustry, Apple'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.
Apple's Probability of Financial Distress (%) Distribution in the Hardware Industry
For the Hardware industry and Technology sector, Apple's Probability of Financial Distress (%) distribution charts can be found below:
* The bar in red indicates where Apple's Probability of Financial Distress (%) falls into.
Apple 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 |
| = | -8.08 |
The Probability of Financial Distress (%) (PFD) was then obtianed by:
| PFD | = | 1 | / | (1 + e^(-LPFD)) | * | 100% |
| = | 0.03% |
The eight explanatory variables are:
1. NIMTAAVG = Net Income to Market Total Assets
*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
3. CASHMTA = Cash to Market Total Assets
For non-financial companies, CASHMTA is measured as:
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).
Apple (AAPL) Business Description
Traded in Other Exchanges
Address
One Apple Park Way, Cupertino, CA, USA, 95014
Apple is among the largest companies in the world, with a broad portfolio of hardware and software products targeted at consumers and businesses. Apple's iPhone makes up a majority of the firm sales, and Apple's other products like Mac, iPad, and Watch are designed around the iPhone as the focal point of an expansive software ecosystem. Apple has progressively worked to add new applications, like streaming video, subscription bundles, and augmented reality. The firm designs its own software and semiconductors while working with subcontractors like Foxconn and TSMC to build its products and chips. Slightly less than half of Apple's sales come directly through its flagship stores, with a majority of sales coming indirectly through partnerships and distribution.
Executives
| Chris Kondo |
officer: Principal Accounting Officer |
1 INFINITE LOOP, CUPERTINO CA 95014 |
| Katherine L. Adams |
officer: SVP, General Counsel |
APPLE INC., 1 INFINITE LOOP, CUPERTINO CA 95014 |
| Luca Maestri |
officer: Senior Vice President, CFO |
1 INFINITE LOOP, CUPERTINO CA 95014 |
| Jeffrey E Williams |
officer: COO |
ONE INFINITE LOOP, CUPERTINO CA 95014 |
| Deirdre O'brien |
officer: Senior Vice President |
ONE APPLE PARK WAY, CUPERTINO CA 95014 |
| Timothy D Cook |
director, officer: Chief Executive Officer |
C/O APPLE INC, ONE INFINITE LOOP, CUPERTINO CA 95014 |
| Arthur D Levinson |
director |
C/O GENENTECH INC, 1 DNA WAY MS 49, SOUTH SAN FRANCISCO CA 94080-4990 |
| Alex Gorsky |
director |
JOHNSON & JOHNSON, ONE JOHNSON & JOHNSON PLAZA, NEW BRUNSWICK NJ 08933 |
| Monica C Lozano |
director |
|
| Angela J Ahrendts |
officer: Senior Vice President |
1 INFINITE LOOP, CUPERTINO CA 95014 |
| Johny Srouji |
officer: Senior Vice President |
1 INFINITE LOOP, CUPERTINO CA 95014 |
| Craig Federighi |
officer: Senior Vice President |
807 11TH AVENUE, SUNNYVALE CA 94089 |
| Daniel J. Riccio |
officer: Senior Vice President |
1 INFINITE LOOP, CUPERTINO CA 95014 |
| Philip W Schiller |
officer: Senior Vice President |
C/O APPLE INC, ONE INFINITE LOOP, CUPERTINO CA 95014 |
| Susan Wagner |
director |
C/O BLACKROCK, INC., 40 EAST 52ND STREET, NEW YORK NY 10022 |
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