What is Prospect Capital 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, Prospect Capital's Probability of Financial Distress (%) is 0.07%.
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 Prospect Capital's Probability of Financial Distress (%)
For the Asset Management subindustry, Prospect Capital'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.
Prospect Capital's Probability of Financial Distress (%) Distribution in the Asset Management Industry
For the Asset Management industry and Financial Services sector, Prospect Capital's Probability of Financial Distress (%) distribution charts can be found below:
* The bar in red indicates where Prospect Capital's Probability of Financial Distress (%) falls into.
Prospect Capital 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 |
| = | -7.26 |
The Probability of Financial Distress (%) (PFD) was then obtianed by:
| PFD | = | 1 | / | (1 + e^(-LPFD)) | * | 100% |
| = | 0.07% |
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 banks, 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).
Prospect Capital (Prospect Capital) Business Description
Traded in Other Exchanges
Address
10 East 40th Street, 42nd Floor, New York, NY, USA, 10016
Prospect Capital Corp is a closed-end investment company based in the United States. Its investment objective is to generate both current income and long-term capital appreciation through debt and equity investments. The company invests primarily in senior and subordinated debt and equity of private companies for acquisitions, divestitures, growth, development, recapitalizations, and other purposes. It makes investments, including lending in private equity, sponsored transactions, directly to companies, investments in structured credit, real estate, and syndicated debt.
Executives
| M Grier Eliasek |
director, officer: President and COO |
C/O PROSPECT ENERGY CORPORATION, 10 E. 40TH STREET, 40TH FLOOR, NEW YORK NY 10016 |
| Van Dask Kristin Lea |
officer: CFO, TREASURER, SECRETARY, CCO |
10 EAST 40TH ST, NEW YORK NY 10016 |
| John F Barry |
director, officer: Chief Executive Officer |
C/O PROSPECT ENERGY CORPORATION, 10 EAST 40TH STREET, 42TH FLOOR, NEW YORK NY 10016 |
| Eugene S Stark |
officer: Chief Financial Officer |
GENERAL AMERICAN INVESTORS COMPANY, INC., 530 FIFTH AVE - 26TH FLOOR, NEW YORK NY 10036 |
| William Gremp |
director |
10 E. 40TH ST, 44TH FLOOR, NEW YORK NY 10016 |
| Brian H Oswald |
officer: CCO and Secretary, other: CCO and Secretary |
|
| Matthew C. Barry |
other: Family Insider |
10 EAST 40TH STREET, 44TH FLOOR, NEW YORK NY 10016 |
| Graham Anderson |
director |
10 EAST 40TH STREET, 44TH FLOOR, NEW YORK NY 10016 |
| Andrew C. Cooper |
director |
10 EAST 40TH STREET, 44TH FLOOR, NEW YORK NY 10016 |
| Robert Everett |
other: VP |
10 EAST 40TH STREET, 44TH FLOOR, NEW YORK NY 10016 |
| Simon Marom |
other: VP- Legal |
10 EAST 40TH STREET, 44TH FLOOR, NEW YORK NY 10016 |
| Robert Kleinman |
other: Senior VP |
10 EAST 40TH STREET, 44TH FLOOR, NEW YORK NY 10016 |
| David Belzer |
other: Managing Director |
10 EAST 40TH STREET, 44TH FLOOR, NEW YORK NY 10016 |
| Amir Friedman |
other: VP |
10 EAST 40TH STREET, 44TH FLOOR, NEW YORK NY 10016 |
| William Montgomery Cook |
other: Managing Director |
10 EAST 40TH STREET, 44TH FLOOR, NEW YORK NY 10016 |
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