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Travis Perkins (LSE:TPK) Financial Strength : 6 (As of Dec. 2023)


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What is Travis Perkins Financial Strength?

Travis Perkins has the Financial Strength Rank of 6.

GuruFocus Financial Strength Rank measures how strong a company's financial situation is. It is based on these factors:

1. The debt burden that the company has as measured by its Interest Coverage (current year). The higher, the better.
2. Debt to revenue ratio. The lower, the better.
3. Altman Z-Score.

Travis Perkins did not have earnings to cover the interest expense. Travis Perkins's debt to revenue ratio for the quarter that ended in Dec. 2023 was 0.22. As of today, Travis Perkins's Altman Z-Score is 2.39.


Competitive Comparison of Travis Perkins's Financial Strength

For the Building Products & Equipment subindustry, Travis Perkins's Financial Strength, along with its competitors' market caps and Financial Strength 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.


Travis Perkins's Financial Strength Distribution in the Construction Industry

For the Construction industry and Industrials sector, Travis Perkins's Financial Strength distribution charts can be found below:

* The bar in red indicates where Travis Perkins's Financial Strength falls into.



Travis Perkins Financial Strength Calculation

GuruFocus Financial Strength Rank measures how strong a company's financial situation is. It is based on these factors

A company ranks high with financial strength is likely to withstand any business slowdowns and recessions.

1. The debt burden that the company has as measured by its Interest Coverage (current year). The higher, the better.

Note: If both Interest Expense and Interest Income are empty, while Net Interest Income is negative, then use Net Interest Income as Interest Expense.

Interest Coverage is a ratio that determines how easily a company can pay interest expenses on outstanding debt. It is calculated by dividing a company's Operating Income (EBIT) by its Interest Expense:

Travis Perkins's Interest Expense for the months ended in Dec. 2023 was £-25 Mil. Its Operating Income for the months ended in Dec. 2023 was £-4 Mil. And its Long-Term Debt & Capital Lease Obligation for the quarter that ended in Dec. 2023 was £964 Mil.

Travis Perkins's Interest Coverage for the quarter that ended in Dec. 2023 is

Travis Perkins did not have earnings to cover the interest expense.

The higher the ratio, the stronger the company's financial strength is.

2. Debt to revenue ratio. The lower, the better.

Travis Perkins's Debt to Revenue Ratio for the quarter that ended in Dec. 2023 is

Debt to Revenue Ratio=Total Debt (Q: Dec. 2023 ) / Revenue
=(Short-Term Debt & Capital Lease Obligation + Long-Term Debt & Capital Lease Obligation) / Revenue
=(89.6 + 963.9) / 4779.6
=0.22

3. Altman Z-Score.

Z-Score model is an accurate forecaster of failure up to two years prior to distress. It can be considered the assessment of the distress of industrial corporations.

The zones of discrimination were as such:

When Z-Score is less than 1.81, it is in Distress Zones.
When Z-Score is greater than 2.99, it is in Safe Zones.
When Z-Score is between 1.81 and 2.99, it is in Grey Zones.

Travis Perkins has a Z-score of 2.39, indicating it is in Grey Zones. This implies that Travis Perkins is in some kind of financial stress. If it is below 1.81, the company may faces bankrupcy risk.

Warning Sign:

Altman Z-score of 2.39 is in the grey area. This implies that the company is under some kind of financial stress. If it is below 1.8, the company may face bankruptcy risk.

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.


Travis Perkins  (LSE:TPK) Financial Strength Explanation

The maximum rank is 10. Companies with rank 7 or higher will be unlikely to fall into distressed situations. Companies with rank of 3 or less are likely in financial distress.

Travis Perkins has the Financial Strength Rank of 6.


Travis Perkins Financial Strength Related Terms

Thank you for viewing the detailed overview of Travis Perkins's Financial Strength provided by GuruFocus.com. Please click on the following links to see related term pages.


Travis Perkins (LSE:TPK) Business Description

Traded in Other Exchanges
Address
Lodge Farm Industrial Estate, Ryehill House, Rye Hill Close, Northampton, GBR, NN5 7UA
Travis Perkins PLC makes and sells products to the construction and home improvement industries in the United Kingdom. The company organizes itself in two segments: merchanting, which serves large trade customers with specialized needs; Toolstation, which provides power tools, hand tools, and electronic equipment to small trade builders and individuals. The largest portion of revenue comes from the merchanting segment, and the majority of company sales are made by delivery.

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