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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, SITO Mobile's Probability of Financial Distress (%) is 0.00%.
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.
For the Telecom Services subindustry, SITO Mobile'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.
For the Telecommunication Services industry and Communication Services sector, SITO Mobile's Probability of Financial Distress (%) distribution charts can be found below:
* The bar in red indicates where SITO Mobile's Probability of Financial Distress (%) falls into.
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 |
= | 0.00 |
The Probability of Financial Distress (%) (PFD) was then obtianed by:
PFD | = | 1 | / | (1 + e^(-LPFD)) | * | 100% |
= | 0.00% |
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
MB | = | Market Cap | / | Adjusted Book Equity |
= | Market Cap | / | (Total Stockholders Equity + 0.1 * ( Market Cap - Total Stockholders Equity)) |
8. PRICE
PRICE is measured as the log of the stock price, capped at log(15).
SITO Mobile (OTCPK:STTO) 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.
Thank you for viewing the detailed overview of SITO Mobile's Probability of Financial Distress (%) provided by GuruFocus.com. Please click on the following links to see related term pages.
Stephen D Baksa | director | |
Scott L Kauffman | officer: Chief Executive Officer | 260 CHURCHILL AVENUE, PALO ALTO CA 94301 |
Priore Mark Del | other: Former Chief Financial Officer | C/O SITO MOBILE, LTD., 100 TOWN SQUARE PLACE, SUITE 204, JERSEY CITY NJ 07310 |
Itzhak Fisher | director | 767 FIFTH AVE STE 4300, NEW YORK NY 10153 |
Matthew Stecker | director | 711 SOUTH BRYN MAWR AVE., BRYN MAWR PA 19010 |
Thomas Thekkethala | director | 9777 PYRAMID COURT, SUITE 100, ENGLEWOOD CO 80112 |
Brent David Rosenthal | director | C/O WR HUFF ASSET MANAGEMENT, 67 PARK PLACE, MORRISTOWN NJ 07960 |
Betsy J Bernard | director | 711 HIGH STREET, DES MOINES IA 50392-0300 |
Lawrence Firestone | officer: Interim CFO | C/O CVD EQUIPMENT CORPORATION, C/O CVD EQUIPMENT CORPORATION, CENTRAL ISLIP NY 11722 |
Lowell W Robinson | director | 470 WEST END AVENUE, NEW YORK NY 10024 |
Karen Singer | 10 percent owner | 212 VACCARO DRIVE, CRESSKILL NJ 07626 |
Philip B Livingston | director | 1241 EAST MAIN ST, STAMFORD CT 06902 |
Stuart Levine | director | 3 HUNTINGTON QUADRANGLE, SUITE 200S, MELVILLE NY 11747-8943 |
James Larry Nelson | director | 2747 PARADISE ROAD, PH2804, LAS VEGAS NV 89109 |
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