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Rite Aid Corp  (NYSE:RAD) Financial Strength: 4 (As of Aug. 2017)

Rite Aid Corp has the Financial Strength Rank of 4.

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.

Rite Aid Corp's Interest Coverage for the quarter that ended in Aug. 2017 was 0.47. Rite Aid Corp's debt to revenue ratio for the quarter that ended in Aug. 2017 was 0.93. As of today, Rite Aid Corp's Altman Z-Score is 2.68.


Historical Data

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

* Premium members only.

Rite Aid Corp Annual Data

Feb08 Feb09 Feb10 Feb11 Feb12 Feb13 Feb14 Feb15 Feb16 Feb17
Financial Strength Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 0.00 0.00 0.00 0.00 0.00

Rite Aid Corp Quarterly Data

Nov12 Feb13 May13 Aug13 Nov13 Feb14 May14 Aug14 Nov14 Feb15 May15 Aug15 Nov15 Feb16 May16 Aug16 Nov16 Feb17 May17 Aug17
Financial Strength Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 0.00 0.00 0.00 0.00 0.00

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.


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:

Rite Aid Corp's Interest Expense for the months ended in Aug. 2017 was $-111 Mil. Its Operating Income for the months ended in Aug. 2017 was $53 Mil. And its Long-Term Debt & Capital Lease Obligation for the quarter that ended in Aug. 2017 was $7,120 Mil.

Rite Aid Corp's Interest Coverage for the quarter that ended in Aug. 2017 is

Interest Coverage=-1*Operating Income (Q: Aug. 2017 )/Interest Expense (Q: Aug. 2017 )
=-1*52.697/-111.261
=0.47

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

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

Rite Aid Corp's Debt to Revenue Ratio for the quarter that ended in Aug. 2017 is

Debt to Revenue Ratio=Total Debt (Q: Aug. 2017 ) / Revenue (Q: Aug. 2017 )
=(Current Portion of Long-Term Debt + Long-Term Debt & Capital Lease Obligation) / Revenue
=(22.491 + 7120.439) / 7678.903
=0.93

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.

Rite Aid Corp has a Z-score of 2.68, indicating it is in Grey Zones. This implies that Rite Aid Corp is in some kind of financial stress. If it is below 1.81, the company may faces bankrupcy risk.

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


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.

Rite Aid Corp has the Financial Strength Rank of 4.


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