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Melco Resorts and Entertainment (Melco Resorts and Entertainment) Financial Strength : 3 (As of Mar. 2024)


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What is Melco Resorts and Entertainment Financial Strength?

Melco Resorts and Entertainment has the Financial Strength Rank of 3. It displays poor financial strength and is likely in financial distress. Usually this is caused by too much debt for the company.

Warning Sign:

Melco Resorts and Entertainment Ltd displays poor financial strength. Usually, this is caused by too much debt for the company.

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.

Melco Resorts and Entertainment's Interest Coverage for the quarter that ended in Mar. 2024 was 1.01. Melco Resorts and Entertainment's debt to revenue ratio for the quarter that ended in Mar. 2024 was 1.71. As of today, Melco Resorts and Entertainment's Altman Z-Score is 0.17.


Competitive Comparison of Melco Resorts and Entertainment's Financial Strength

For the Resorts & Casinos subindustry, Melco Resorts and Entertainment'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.


Melco Resorts and Entertainment's Financial Strength Distribution in the Travel & Leisure Industry

For the Travel & Leisure industry and Consumer Cyclical sector, Melco Resorts and Entertainment's Financial Strength distribution charts can be found below:

* The bar in red indicates where Melco Resorts and Entertainment's Financial Strength falls into.



Melco Resorts and Entertainment 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:

Melco Resorts and Entertainment's Interest Expense for the months ended in Mar. 2024 was $-124 Mil. Its Operating Income for the months ended in Mar. 2024 was $125 Mil. And its Long-Term Debt & Capital Lease Obligation for the quarter that ended in Mar. 2024 was $7,558 Mil.

Melco Resorts and Entertainment's Interest Coverage for the quarter that ended in Mar. 2024 is

Interest Coverage=-1*Operating Income (Q: Mar. 2024 )/Interest Expense (Q: Mar. 2024 )
=-1*125.35/-124.192
=1.01

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

Warning Sign:

Ben Graham prefers companies' interest coverage to be at least 5. Melco Resorts and Entertainment Ltds earnings cannot cover its interest expense. If the situation continues, the company may have to issue more debt.

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

Melco Resorts and Entertainment's Debt to Revenue Ratio for the quarter that ended in Mar. 2024 is

Debt to Revenue Ratio=Total Debt (Q: Mar. 2024 ) / Revenue
=(Short-Term Debt & Capital Lease Obligation + Long-Term Debt & Capital Lease Obligation) / Revenue
=(52.7 + 7557.632) / 4449.628
=1.71

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.

Melco Resorts and Entertainment has a Z-score of 0.17, indicating it is in Distress Zones. This implies bankrupcy possibility in the next two years.

Warning Sign:

Altman Z-score of 0.17 is in distress zone. This implies bankruptcy possibility in the next two years.

* 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.


Melco Resorts and Entertainment  (NAS:MLCO) 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.

Melco Resorts and Entertainment has the Financial Strength Rank of 3. It displays poor financial strength and is likely in financial distress. Usually this is caused by too much debt for the company.


Melco Resorts and Entertainment Financial Strength Related Terms

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Melco Resorts and Entertainment (Melco Resorts and Entertainment) Business Description

Traded in Other Exchanges
Address
60 Wyndham Street, 38th Floor, The Centrium, Central, Hong Kong, HKG
Melco Resorts & Entertainment is one of only six licensed casino operators in Macao. It operates Altira, a complex focused on VIP customers; City of Dreams, an integrated resort in Cotai serving both mass-market and premium patrons; and Mocha Clubs electronic gaming machines. The company also has a majority interest in Studio City, which opened in 2015. Outside Macao, Melco owns City of Dreams Manila in the Philippines and City of Dreams Mediterranean in Cyprus. The business mix in terms of adjusted EBITDA was about 84% from Macao with the rest largely from the Philippines as of 2019.