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PPL (PPL) Probability of Financial Distress (%) : 0.03% (As of Dec. 15, 2024)


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What is PPL 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, PPL'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 PPL's Probability of Financial Distress (%)

For the Utilities - Regulated Electric subindustry, PPL'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.


PPL's Probability of Financial Distress (%) Distribution in the Utilities - Regulated Industry

For the Utilities - Regulated industry and Utilities sector, PPL's Probability of Financial Distress (%) distribution charts can be found below:

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



PPL 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
=-8.04

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).


PPL  (NYSE:PPL) 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.


PPL Probability of Financial Distress (%) Related Terms

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PPL Business Description

Industry
GURUFOCUS.COM » STOCK LIST » Utilities » Utilities - Regulated » PPL Corp (NYSE:PPL) » Definitions » Probability of Financial Distress (%)
Traded in Other Exchanges
Address
Two North Ninth Street, Allentown, PA, USA, 18101-1179
PPL is a holding company of regulated utilities in Pennsylvania, Kentucky, and Rhode Island. The Pennsylvania regulated delivery and transmission segment distributes electricity to customers in central and eastern Pennsylvania. LG&E and KU are involved in regulated electricity generation, transmission, and distribution in Kentucky. The Kentucky utilities also serve gas customers. Rhode Island Energy operates electric and gas utilities in Rhode Island.
Executives
Crockett John R Iii officer: President of a PPL Subsidiary TWO NORTH NINTH STREET, ALLENTOWN PA 18101
Tadd J Henninger officer: Vice President and Treasurer TWO NORTH NINTH STREET, ALLENTOWN PA 18101
David J Bonenberger officer: President of a PPL Subsidiary TWO NORTH NINTH STREET, ALLENTOWN PA 18101
Linda G Sullivan director P.O.BOX 800, 2244 WALNUT GROVE AVENUE, ROSEMEAD CA 91770
Francis X Sullivan officer: EVP and COO TWO NORTH NINTH STREET, ALLENTOWN PA 18101
Bergstein Joseph P Jr officer: VP-IR and Treasurer TWO NORTH NINTH STREET, ALLENTOWN PA 18101
Vincent Sorgi officer: Vice President and Controller TWO NORTH NINTH STREET, ALLENTOWN PA 18101
Stephanie R Raymond officer: President of a PPL Subsidiary TWO NORTH NINTH STREET, ALLENTOWN PA 18101
Gregory N Dudkin officer: President of a PPL Subsidiary TWO NORTH NINTH STREET, ALLENTOWN PA 18101
Angela K Gosman officer: SVP and CHRO TWO NORTH NINTH STREET, ALLENTOWN PA 18101
Heather B Redman director TWO NORTH NINTH STREET, ALLENTOWN PA 18101
Wendy E Stark officer: SVP, GC and Corp Sec TWO NORTH NINTH STREET, ALLENTOWN PA 18101
Joanne H Raphael officer: SVP, GC & Corp Sec TWO NORTH NINTH STREET, ALLENTOWN PA 18101
Art P Beattie director 600 NORTH 18TH STREET, BIRMINGHAM AL 35291
William H Spence officer: Executive VP and COO UNIVERSITY OFFICE PLAZA, 252 CHAPMAN RD., PO BOX 6066, NEWARK DE 19714-0066