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Graco Probability of Financial Distress (%)

: 0.03% (As of Today)
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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, Graco'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

For the Specialty Industrial Machinery subindustry, Graco'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.

   

Graco Probability of Financial Distress (%) Distribution

For the Industrial Products industry and Industrials sector, Graco's Probability of Financial Distress (%) distribution charts can be found below:

* The bar in red indicates where Graco's Probability of Financial Distress (%) falls into.



Graco 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
=-8.23

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

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


8. PRICE

PRICE is measured as the log of the stock price, capped at log(15).


Graco  (NYSE:GGG) 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.


Graco Probability of Financial Distress (%) Related Terms

Thank you for viewing the detailed overview of Graco's Probability of Financial Distress (%) provided by GuruFocus.com. Please click on the following links to see related term pages.


Graco Business Description

Graco logo
Industry
Industrials » Industrial Products NAICS : 333249 SIC : 3561
Traded in Other Exchanges
Address
88-11th Avenue Northeast, Minneapolis, MN, USA, 55413
Graco manufactures equipment used for managing fluids, coatings, and adhesives, specializing in difficult-to-handle materials. Graco's business is organized into three segments: industrial, process, and contractor. The Minnesota-based firm serves a wide range of end markets, including industrial, automotive, and construction, and its broad array of products include pumps, valves, meters, sprayers, and equipment used to apply coatings, sealants, and adhesives. The firm generated roughly $1.7 billion in sales and $410 million in operating income in 2020.
Executives
Zumbolo Brian J officer: President, Asia Pacific PO BOX 1441 MINNEAPOLIS MN 55440-1441
Gallivan Karen Park officer: Executive Vice President P O BOX 1441 MINNEAPOLIS MN 55440-1441
Wheeler Kevin J. director A. O. SMITH CORPORATION 500 TENNESSEE WALTZ PARKWAY ASHLAND CITY TN 37015
Van Sant R William director PO BOX 1441 MINNEAPOLIS MN 55440-1441
Eugster Jack W director PO BOX 1441 MINNEAPOLIS MN 55440-1441
Etchart Eric director ROOM F, 22F CROSS REGION PLAZA 899 LINGLING ROAD SHANGHAI F4 200030
White Emily director C/O LULULEMON ATHLETICA INC. 1818 CORNWALL AVENUE VANCOUVER A1 V6J 1C7
Morfitt Martha A M director P.O. BOX 1441 MINNEAPOLIS MN 55440-1441
Mitau Lee R director P O BOX 1441 MINNEAPOLIS MN 55440-1441
Feragen Jody H director 1 HORMEL PLACE AUSTIN TX 55912
Gilligan J Kevin director P O BOX 1441 MINNEAPOLIS MN 55440-1441
White Timothy R officer: President, White Knight, QED 88 11TH AVENUE NE MINNEAPOLIS MN 55413
Johnson Dale D officer: President, Worldwide CED P.O. BOX 1441 MINNEAPOLIS MN 5440-1441
Chambers Caroline M officer: President, EMEA PO BOX 1441 MINNEAPOLIS MN 55440-1441
Wordell Angela F officer: EVP, Operations, President ONG 88 11TH AVENUE NE MINNEAPOLIS MN 55413

Graco Headlines

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