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TransDigm Group Financial Strength

: 3 (As of Mar. 2020)
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TransDigm Group 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.

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.

TransDigm Group's Interest Coverage for the quarter that ended in Mar. 2020 was 2.38. TransDigm Group's debt to revenue ratio for the quarter that ended in Mar. 2020 was 12.86. As of today, TransDigm Group's Altman Z-Score is 1.35.

Competitive Comparison
* 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.

TransDigm Group Financial Strength Distribution

* The bar in red indicates where TransDigm Group's Financial Strength falls into.


TransDigm Group 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:

TransDigm Group's Interest Expense for the months ended in Mar. 2020 was $-252 Mil. Its Operating Income for the months ended in Mar. 2020 was $599 Mil. And its Long-Term Debt & Capital Lease Obligation for the quarter that ended in Mar. 2020 was $17,933 Mil.

TransDigm Group's Interest Coverage for the quarter that ended in Mar. 2020 is

Interest Coverage=-1*Operating Income (Q: Mar. 2020 )/Interest Expense (Q: Mar. 2020 )
=-1*599/-252
=2.38

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

Warning Sign:

Ben Graham prefers companies interest coverage is at least 5. TransDigm Group Inc interest coverage is 2.28, which is low.

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

TransDigm Group's Debt to Revenue Ratio for the quarter that ended in Mar. 2020 is

Debt to Revenue Ratio=Total Debt (Q: Mar. 2020 ) / Revenue (Q: Mar. 2020 )
=(Short-Term Debt & Capital Lease Obligation + Long-Term Debt & Capital Lease Obligation) / Revenue
=(629 + 17933) / 1443
=12.86

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.

TransDigm Group has a Z-score of 1.35, indicating it is in Distress Zones. This implies bankrupcy possibility in the next two years.

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

TransDigm Group  (NYSE:TDG) 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.

TransDigm Group 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.

TransDigm Group Financial Strength Related Terms

TransDigm Group Financial Strength Headlines

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