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
*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).
PPL Business Description
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 |
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