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LKNCY (Luckin Coffee) Altman Z-Score : 4.04 (As of Dec. 14, 2024)


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What is Luckin Coffee Altman Z-Score?

The Altman Z-Score is a model designed to predict the likelihood of a company going bankrupt within the next two years. Created by American finance professor Edward Altman in 1968, the model is specifically designed for publicly traded manufacturing companies with assets greater than $1 million.

Good Sign:

Altman Z-score of 4.24 is strong.

Luckin Coffee has a Altman Z-Score of 4.04, indicating it is in Safe Zones. This implies the Altman Z-Score is strong.

The zones of discrimination were as such:

When Altman Z-Score <= 1.8, it is in Distress Zones.
When Altman Z-Score >= 3, it is in Safe Zones.
When Altman Z-Score is between 1.8 and 3, it is in Grey Zones.

The historical rank and industry rank for Luckin Coffee's Altman Z-Score or its related term are showing as below:

LKNCY' s Altman Z-Score Range Over the Past 10 Years
Min: -1.68   Med: 4.31   Max: 13.74
Current: 4.24

During the past 7 years, Luckin Coffee's highest Altman Z-Score was 13.74. The lowest was -1.68. And the median was 4.31.


Luckin Coffee Altman Z-Score Historical Data

The historical data trend for Luckin Coffee's Altman Z-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.

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Luckin Coffee Altman Z-Score Chart

Luckin Coffee Annual Data
Trend Dec17 Dec18 Dec19 Dec20 Dec21 Dec22 Dec23
Altman Z-Score
Get a 7-Day Free Trial 7.36 -1.68 0.73 5.22 4.62

Luckin Coffee Quarterly Data
Sep19 Dec19 Jun20 Sep20 Dec20 Mar21 Jun21 Sep21 Dec21 Mar22 Jun22 Sep22 Dec22 Mar23 Jun23 Sep23 Dec23 Mar24 Jun24 Sep24
Altman Z-Score Get a 7-Day Free Trial 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 5.98 4.62 4.35 3.79 4.72

Competitive Comparison of Luckin Coffee's Altman Z-Score

For the Restaurants subindustry, Luckin Coffee's Altman Z-Score, along with its competitors' market caps and Altman Z-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.


Luckin Coffee's Altman Z-Score Distribution in the Restaurants Industry

For the Restaurants industry and Consumer Cyclical sector, Luckin Coffee's Altman Z-Score distribution charts can be found below:

* The bar in red indicates where Luckin Coffee's Altman Z-Score falls into.



Luckin Coffee Altman Z-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.

Luckin Coffee's Altman Z-Score for today is calculated with this formula:

Z=1.2*X1+1.4*X2+3.3*X3+0.6*X4+1.0*X5
=1.2*0.1495+1.4*-0.2994+3.3*0.1334+0.6*4.0266+1.0*1.4279
=4.04

* 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 Z-Score when X4 or X5 value is 0.

Trailing Twelve Months (TTM) ended in Sep. 2024:
Total Assets was $3,122 Mil.
Total Current Assets was $1,426 Mil.
Total Current Liabilities was $959 Mil.
Retained Earnings was $-935 Mil.
Pre-Tax Income was 233.942 + 152.216 + -7.087 + 37.133 = $416 Mil.
Interest Expense was -0.271 + -0.012 + 0 + 0 = $-0 Mil.
Revenue was 1438.774 + 1158.232 + 871.783 + 989.464 = $4,458 Mil.
Market Cap (Today) was $6,599 Mil.
Total Liabilities was $1,639 Mil.

* Note that for stock reported semi-annually or annually, GuruFocus uses latest annual data as the TTM data.

X1=Working Capital/Total Assets
=(Total Current Assets - Total Current Liabilities)/Total Assets
=(1426.147 - 959.299)/3122.352
=0.1495

X2=Retained Earnings/Total Assets
=-934.829/3122.352
=-0.2994

X3=Earnings Before Interest and Taxes/Total Assets
=(Pre-Tax Income - Interest Expense)/Total Assets
=(416.204 - -0.283)/3122.352
=0.1334

X4=Market Value Equity/Book Value of Total Liabilities
=Market Cap/Total Liabilities
=6599.270/1638.926
=4.0266

X5=Revenue/Total Assets
=4458.253/3122.352
=1.4279

The zones of discrimination were as such:

Distress Zones - 1.81 < Grey Zones < 2.99 - Safe Zones

Luckin Coffee has a Altman Z-Score of 4.04 indicating it is in Safe Zones.

Study by Altman found that companies that are in Distress Zone have more than 80% of chances of bankruptcy in two years.


Luckin Coffee  (OTCPK:LKNCY) Altman Z-Score Explanation

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.

X4, Market Value of Equity/Book Value of Total Liabilities (MVE/TL): The measure shows how much the firm's assets can decline in value (measured by market value of equity plus debt) before the liabilities exceed the assets and the firm becomes insolvent.

X5, Revenue/Total Assets (S/TA): The capital-turnover ratio is a standard financial ratio illustrating the sales generating ability of the firm's assets.

Read more about Altman Z-Score and the original research.


Be Aware

Altman Z-Score does not apply to financial companies.


Luckin Coffee Altman Z-Score Related Terms

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Luckin Coffee Business Description

Traded in Other Exchanges
Address
1-3 Taibei Road, 28th Floor, Building T3, Haixi Jingu Plaza, Siming District, Fujian, Xiamen, CHN, 361008
Luckin Coffee Inc is a China based company engaged in operation of coffee stores. It sources its Arabica coffee beans from various suppliers and engage World Barista Champion teams to design its coffee recipes. The company also has partnered with suppliers for other products such as juices and light meals.