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, RTX'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 Aerospace & Defense subindustry, RTX'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.
RTX Probability of Financial Distress (%) Distribution
For the Aerospace & Defense industry and Industrials sector, RTX's Probability of Financial Distress (%) distribution charts can be found below:
* The bar in red indicates where RTX's Probability of Financial Distress (%) falls into.
RTX 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 |
| = | -8.33 |
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).
RTX (RTX) Business Description
Traded in Other Exchanges
Address
1000 Wilson Boulevard, Arlington, VA, USA, 22209
RTX is a diversified aerospace and defense industrial company formed from the merger of United Technologies and Raytheon, with roughly equal exposure as a supplier to commercial aerospace manufacturers and to the defense market. The company operates in three segments: Collins Aerospace, a diversified aerospace supplier; Pratt & Whitney, an aircraft engine manufacturer; and Raytheon, a defense prime contractor providing a mix of missiles, missile defense systems, sensors, hardware, and communications technology to the military.
Executives
| Winnefeld James A Jr |
director |
870 WINTER STREET, WALTHAM MA 02451 |
| Amy L Johnson |
officer: Corporate VP and Controller |
870 WINTER STREET, WALTHAM MA 02451 |
| Leanne G Caret |
director |
1000 WILSON BLVD, ARLINGTON VA 22209 |
| Shane G Eddy |
officer: President, P&W |
870 WINTER STREET, WALTHAM MA 02451 |
| Gregory Hayes |
officer: Vice President, Controller |
870 WINTER STREET, WALTHAM MA 02451 |
| Christopher T. Calio |
officer: Pres, Comm Engines, P&W |
870 WINTER STREET, WALTHAM MA 02451 |
| Dantaya M Williams |
officer: Chief Human Resources Officer |
870 WINTER STREET, WALTHAM MA 02451 |
| Michael R Dumais |
officer: SVP, Strategic Planning |
870 WINTER STREET, WALTHAM MA 02451 |
| Tracy A Atkinson |
director |
MFS INVESTMENT MANAGEMENT, 500 BOYLSTON ST., BOSTON MA 02116 |
| Wesley D Kremer |
officer: President, RMD |
870 WINTER STREET, WALTHAM MA 02451 |
| Ramsaran Maharajh |
officer: EVP and General Counsel |
870 WINTER STREET, WALTHAM MA 02451 |
| Robert Kelly Ortberg |
officer: CEO, Collins Aerospace Systems |
870 WINTER STREET, WALTHAM MA 02451 |
| Frank R Jimenez |
officer: EVP and General Counsel |
GE HEALTHCARE TECHNOLOGIES INC., 500 W. MONROE ST., CHICAGO IL 606061 |
| Harris Bernard A Jr |
director |
3411 ERIN KNOLL CT, HOUSTON TX 77059 |
| Thomas A Kennedy |
director, officer: Executive Chairman |
870 WINTER STREET, WALTHAM MA 02451 |
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