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, Research Frontiers's Probability of Financial Distress (%) is 0.14%.
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
For the Electronic Components subindustry, Research Frontiers'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.
Research Frontiers Probability of Financial Distress (%) Distribution
For the Hardware industry and Technology sector, Research Frontiers's Probability of Financial Distress (%) distribution charts can be found below:
* The bar in red indicates where Research Frontiers's Probability of Financial Distress (%) falls into.
Research Frontiers 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 |
| = | -6.55 |
The Probability of Financial Distress (%) (PFD) was then obtianed by:
| PFD | = | 1 | / | (1 + e^(-LPFD)) | * | 100% |
| = | 0.14% |
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).
Research Frontiers Business Description
Traded in Other Exchanges
N/A
Address
240 Crossways Park Drive, Woodbury, NY, USA, 11797-2033
Research Frontiers Inc is engaged in the development and marketing of technology and devices to control the flow of light. The company develops and licenses its patented suspended particle device light-control technology to other companies that manufacture and market the SPD-Smart chemical emulsion, the light-control film made from the chemical emulsion, the light-control panels made by laminating the film, electronics to power end-products incorporating the film, or lamination services for, and the end-products. Its revenue source comes from the licensing of technology.
Executives
| Douglas Family Trust |
10 percent owner, other: 13(d)(3) group |
125 E. SIR FRANCIS DRAKE BLVD. SUITE 400 LARKSPUR CA 94939 |
| James & Jean Douglas Irrevocable Descendants Trust |
10 percent owner, other: 13(d)(3) group |
125 E. SIR FRANCIS DRAKE BLVD. SUITE 400 LARKSPUR CA 94939 |
| Douglas Kevin |
10 percent owner, other: 13(d)(3) group |
125 E. SIR FRANCIS DRAKE BLVD. SUITE 400 LARKSPUR CA 94939 |
| Settle William Graham |
director |
6003 COBRIDGE SQUARE RALEIGH NC 27609 |
| Lapointe Michael R |
officer: VP-Marketing |
PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN"> Ownership Information: LAPOINTE MICHAEL R a.header:link {color: #3b4fae; font-weight: bold; text-decoration: underline;} a.header:visited {color: #3b4fae; font-weight: bold; text-decoration: underline;} a.header:hover {color: #191970;} |
| Harary Joseph M |
director, officer: President and CEO |
PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN"> Ownership Information: HARARY JOSEPH M a.header:link {color: #3b4fae; font-weight: bold; text-decoration: underline;} a.header:visited {color: #3b4fae; font-weight: bold; text-decoration: underline;} a.header:hover {color: #191970;} |
| Van Voorhees Seth |
officer: CFO & VP-Business Development |
12 HARVEY DRIVE SHORT HILLS NJ 07078 |
| Daigle Darryl |
director |
3213 WYTCHWOOD DRIVE MORGAN CITY LA 70380 |
| Kaganowicz Alexander |
director |
1217 CARLLS STRAIGHT PATH DIX HILLS NY 11746 |
| Grimes Gregory George |
director |
24 FIFTH AVENUE APT. 1530 NEW YORK NY 10011 |
| Slovak Steven Michael |
officer: Vice President-Technology |
240 CROSSWAYS PARK DRIVE WOODBURY NY 11797 |
| Saxe Robert L |
director, officer: Chairman of the Board |
PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN"> Ownership Information: SAXE ROBERT L a.header:link {color: #3b4fae; font-weight: bold; text-decoration: underline;} a.header:visited {color: #3b4fae; font-weight: bold; text-decoration: underline;} a.header:hover {color: #191970;} |
| Keen Victor F |
director |
C/O RESEARCH FRONTIERS INC. 240 CROSSWAYS PARK DRIVE WOODBURY NY 11797 |
| Guthrie Marion Philip |
director |
THREE LINCOLN CENTRE 5430 LBJ FWY., SUITE 1480 DALLAS TX 75240 |
| Derby Jack |
director |
399 BOYLSTON STREET BOSTON MA 02117 |
Research Frontiers Headlines
By Seekingalpha 2020-11-08
By Seekingalpha 2020-05-11
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