Altman Z2-Score, also known as Z"-Score, is used to predict the likelihood that a non-manufacturing company (excluding property/financial company) will face bankruptcy within a two-year period.
Good Sign:
Furmanite has a Altman Z2-Score of 5.68, indicating it is in Safe Zones. This implies the Altman Z2-Score is strong.
The zones of discrimination were as such:
When Altman Z2-Score <= 1.1, it is in Distress Zones.
When Altman Z2-Score >= 2.6, it is in Safe Zones.
When Altman Z2-Score is between 1.1 and 2.6, it is in Grey Zones.
The historical rank and industry rank for Furmanite's Altman Z2-Score or its related term are showing as below:
Furmanite Altman Z2-Score Historical Data
The historical data trend for Furmanite's Altman Z2-Score can be seen below:
* 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.
Competitive Comparison of Furmanite's Altman Z2-Score
For the Engineering & Construction subindustry, Furmanite's Altman Z2-Score, along with its competitors' market caps and Altman Z2-Score 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.
Furmanite's Altman Z2-Score Distribution in the Construction Industry
For the Construction industry and Industrials sector, Furmanite's Altman Z2-Score distribution charts can be found below:
* The bar in red indicates where Furmanite's Altman Z2-Score falls into.
Furmanite Altman Z2-Score Calculation
Altman 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.
Z2-Score, also known as Z"-Score is the Z-Score for non-manufacturing companies excluding property/financial companies.
Furmanite's Altman Z2-Score for today is calculated with this formula:
Z
=
6.56
*
X1
+
3.26
*
X2
+
6.72
*
X3
+
1.05
*
X4_2
=
6.56
*
0.5621
+
3.26
*
0.1464
+
6.72
*
0.0635
+
1.05
*
1.0392
=
5.68
* 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. GuruFocus does not calculate Altman Z2-Score when X4_2 value is 0.
Distress Zones - 1.1 < Grey Zones < 2.6 - Safe Zones
Furmanite has a Altman Z2-Score of 5.68 indicating it is in Safe Zones.
Furmanite (NYSE:FRM) Altman Z2-Score Explanation
The original Z-Score model was based on publicly traded manufacturing companies while the Z2-Score, also known as Z"-score can be used for any type of company excluding property/financial companies. Both Z-Score and Z2-Score describes the financial health of a company, and its likelihood of financial distress.
X1: The Working Capital/Total Assets (WC/TA) ratio is a measure of the net liquid assets of the firm relative to the total capitalization. Working capital is defined as the difference between current assets and current liabilities. Ordinarily, a firm experiencing consistent operating losses will have shrinking current assets in relation to total assets. Altman found this one proved to be the most valuable liquidity ratio comparing with the current ratio and the quick ratio. This is however the least significant of the five factors.
X2: Retained Earnings/Total Assets: the RE/TA ratio measures the leverage of a firm. Retained earnings is the account which reports the total amount of reinvested earnings and/or losses of a firm over its entire life. Those firms with high RE, relative to TA, have financed their assets through retention of profits and have not utilized as much debt.
X3, Earnings Before Interest and Taxes/Total Assets (EBIT/TA): This ratio is a measure of the true productivity of the firm's assets, independent of any tax or leverage factors. Since a firm's ultimate existence is based on the earning power of its assets, this ratio appears to be particularly appropriate for studies dealing with corporate failure. This ratio continually outperforms other profitability measures, including cash flow.
Altman Z2-Score does not apply to financial companies.
Furmanite Altman Z2-Score Related Terms
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Furmanite Corp was incorporated in Delaware on January 23, 1953. It provides specialized technical services. The Company together with its subsidiaries conducts business under two operating segments; Technical Services and Engineering & Project Solutions. Technical Services provides specialized technical services, including on-line, off-line and other services. On-line services include leak sealing, hot tapping, line stopping, line isolation, composite repair, valve testing and certain non-destructive testing and inspection services, while off-line services include on-site machining, heat treatment, bolting, valve repair and other non-destructive testing and inspection services. Other services include smart shim services, concrete repair, engineering services, valves and other products and manufacturing. These services and products are provided mainly to electric power generating plants, the petroleum industry, which includes refineries and off-shore drilling rigs, chemical plants and other process industries in the Americas, EMEA and Asia-Pacific through a wholly owned subsidiary of the Parent Company, Furmanite Worldwide, Inc. and its domestic and international subsidiaries and affiliates. The Engineering & Project Solutions operating segment, which includes Furmanite Technical Solutions, provides project planning, professional engineering, downstream non-destructive testing and inspection, construction management, mechanical integrity, field support, quality assurance and plant asset management services, as well as certain other inspection and project management services. Customers include refining and petrochemical operators as well as maintenance, and engineering and construction contractors servicing the downstream and midstream oil and gas markets, all of which are in the Americas. The Company currently operates over 30 offices in the United States. The Company competes against large and well established national and international companies as well as regional and local companies. It also competes with the in-house maintenance departments of customers or potential customers. Many aspects of the Company's operations are subject to governmental regulation.
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