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, Deere'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.
Competitive Comparison
For the Farm & Heavy Construction Machinery subindustry, Deere'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.
Deere Probability of Financial Distress (%) Distribution
For the Farm & Heavy Construction Machinery industry and Industrials sector, Deere's Probability of Financial Distress (%) distribution charts can be found below:
* The bar in red indicates where Deere's Probability of Financial Distress (%) falls into.
Deere 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 |
| = | -8.71 |
The Probability of Financial Distress (%) (PFD) was then obtianed by:
| PFD | = | 1 | / | (1 + e^(-LPFD)) | * | 100% |
| = | 0.02% |
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).
Deere Business Description
Traded in Other Exchanges
Address
One John Deere Place, Moline, IL, USA, 61265
Deere is the world's leading manufacturer of agricultural equipment, producing some of the most recognizable machines in the heavy machinery industry. The company is divided into four reportable segments: production and precision agriculture, small agriculture and turf, construction and forestry, and John Deere Capital. Its products are available through a robust dealer network, which includes over 1,900 dealer locations in North America and approximately 3,700 locations globally. John Deere Capital provides retail financing for machinery to its customers, in addition to wholesale financing for dealers, which increases the likelihood of Deere product sales.
Executives
| Howze Marc A |
officer: Group Pres., Life Sol & CAO |
DEERE & COMPANY ONE JOHN DEERE PLACE MOLINE IL 61265 |
| Reed Cory J |
officer: Pres, Ag & Turf Prod & Prec Ag |
DEERE & COMPANY ONE JOHN DEERE PLACE MOLINE IL 61265 |
| Von Pentz Markwart |
officer: PresAg Turf Small Ag & Turf |
DEERE & COMPANY ONE JOHN DEERE PLACE MOLINE IL 61265 |
| Kalathur Rajesh |
officer: President, JD Financial & CIO |
DEERE & COMPANY ONE JOHN DEERE PLACE MOLINE IL 61265 |
| Stone John H |
officer: Pres., WW Const & For & Pow Sy |
ONE JOHN DEERE PLACE MOLINE IL 61265 |
| Field James M. |
officer: Pres., C&F Division |
DEERE & COMPANY ONE JOHN DEERE PLACE MOLINE IL 61265 |
| Erwin Tami A. |
director |
1095 AVENUE OF THE AMERICAS NEW YORK NY 10036 |
| Holliday Charles O Jr |
director |
1007 MARKET ST WILMINGTON DE 19898 |
| Jones Clayton M |
director |
400 COLLINS ROAD NE CEDAR RAPIDS IA 52498 |
| Smith Sherry M |
director |
PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN"> Ownership Information: SMITH SHERRY 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;} |
| Page Gregory R |
director |
EATON CENTER 1111 SUPERIOR AVENUE CLEVELAND OH 44114 |
| Heuberger Alan Cletus |
director |
2365 CARILLON POINT KIRKLAND WA 98033 |
| Talton Sheila |
director |
C/O ACCO BRANDS CORPORATION 300 TOWER PARKWAY LINCOLNSHIRE IL 60201 |
| Jain Dipak C |
director |
130 EAST RANDOLPH DRIVE CHICAGO IL 60601 |
| Stockton Dmitri L |
director |
777 LONG RIDGE ROAD SYNCHRONY FINANCIAL C/O CORP. SECRETARY STAMFORD CT 06902 |
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