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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, Instil Bio's Probability of Financial Distress (%) is 0.18%.
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 Biotechnology subindustry, Instil Bio'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 Biotechnology industry and Healthcare sector, Instil Bio's Probability of Financial Distress (%) distribution charts can be found below:
* The bar in red indicates where Instil Bio'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 |
= | -6.31 |
The Probability of Financial Distress (%) (PFD) was then obtianed by:
PFD | = | 1 | / | (1 + e^(-LPFD)) | * | 100% |
= | 0.18% |
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).
Instil Bio (NAS:TIL) 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 Instil Bio's Probability of Financial Distress (%) provided by GuruFocus.com. Please click on the following links to see related term pages.
Timothy L. Moore | officer: Chief Operating Officer | C/O KITE PHARMA, INC., 2225 COLORADO AVE., SANTA MONICA CA 90404 |
Sumita Ray | officer: Chief Legal and Admin Officer | C/O PHARMACYCLICS, INC., 995 EAST ARQUES AVENUE, SUNNYVALE CA 94085 |
Nimish P Shah | director | 7 BRYANT PARK, 23RD FLOOR, NEW YORK CITY NY 10018 |
Jack Nielsen | director, 10 percent owner | C/O AKEBIA THERAPEUTICS, INC., 245 FIRST STREET, SUITE 1100, CAMBRIDGE MA 02142 |
Vivo Capital Fund Ix, L.p. | 10 percent owner | 192 LYTTON AVENUE, PALO ALTO CA 94301 |
Mcgaughy R Kent Jr | director | 500 CRESCENT COURT, SUITE 250, DALLAS TX 75201 |
Curative Ventures V Llc | 10 percent owner | 3963 MAPLE AVENUE, SUITE 390, DALLAS TX 75219 |
Bronson Crouch | director, 10 percent owner, officer: CEO and Chairman | C/O INSTIL BIO, INC., 3963 MAPLE AVENUE, SUITE 350, DALLAS TX 75219 |
Vivo Capital Ix, Llc | 10 percent owner | 192 LYTTON AVENUE, PALO ALTO CA 94301 |
Sandeep Laumas | officer: CFO and CBO | 8480 HONEYCUTT RD, SUITE 200, RALEIGH NC 27615 |
Neil W Gibson | director | C/O REGULUS THERAPEUTICS INC., 3545 JOHN HOPKINS COURT SUITE 210, SAN DIEGO CA 92121 |
Gwendolyn Binder | director | C/O CABALETTA BIO, INC., 2929 ARCH STREET, SUITE 600, PHILADELPHIA PA 19104 |
Zachary Roberts | officer: Chief Medical Officer | C/O INSTIL BIO, INC., 3963 MAPLE AVENUE, SUITE 350, DALLAS TX 75219 |
George Matcham | director | C/O INSTIL BIO, INC., 3963 MAPLE AVENUE, SUITE 350, DALLAS TX 75219 |
Vijay Chiruvolu | officer: Chief Technical Officer | C/O TURNSTONE BIOLOGICS CORP., 9310 ATHENA CIRCLE, SUITE 300, LA JOLLA CA 92037 |
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