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.
Northern Tier Energy LP has a Altman Z-Score of 5.25, 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 Northern Tier Energy LP's Altman Z-Score or its related term are showing as below:
Northern Tier Energy LP Altman Z-Score Historical Data
* 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 Northern Tier Energy LP's Altman Z-Score
For the Oil & Gas Refining & Marketing subindustry, Northern Tier Energy LP'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.
Northern Tier Energy LP's Altman Z-Score Distribution in the Oil & Gas Industry
For the Oil & Gas industry and Energy sector, Northern Tier Energy LP's Altman Z-Score distribution charts can be found below:
* The bar in red indicates where Northern Tier Energy LP's Altman Z-Score falls into.
Northern Tier Energy LP 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.
* 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.
Distress Zones - 1.81 < Grey Zones < 2.99 - Safe Zones
Northern Tier Energy LP has a Altman Z-Score of 5.25 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.
Northern Tier Energy LP (NYSE:NTI) 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.
Altman Z-Score does not apply to financial companies.
Northern Tier Energy LP Altman Z-Score Related Terms
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Northern Tier Energy LP (Northern Tier Energy LP) Business Description
Northern Tier Energy LP was incorporated on October 21, 2011. Its an independent downstream energy limited partnership with refining, retail and pipeline operations that serves the PADD II region of the United States. The Company operate its assets in two business segments: the refining business and the retail business. Its refining segment consists of an 89,500 barrels per calendar day (96,500 barrels per stream day) refinery located in St. Paul Park, Minnesota. Its refinery's complexity allows to process a variety of light, heavy, sweet and sour crudes into higher value refined products. Its retail segment operated 164 convenience stores under the SuperAmerica brand and also supported 75 franchised convenience stores, which are also operated under the SuperAmerica brand. These convenience stores are located in Minnesota and Wisconsin and sell various grades of gasoline and diesel, tobacco products and immediately consumable items such as beverages, prepared food and a large variety of snacks and prepackaged items. It also own and operate SuperMom's Bakery, which prepares and distributes baked goods and other prepared food items for sale in its company-operated and franchised convenience stores and other third party locations. Crude oil is the principal raw material for the Company and the majority of the crude oil processed is delivered to the refinery through a pipeline that is owned by MPL, a related party. With respect to its wholesale gasoline and distillate sales and marketing, it compete directly with Koch Industries' Flint Hills Resources Refinery in Pine Bend, Minnesota, as well as the other refiners in the PADD II region and, to a lesser extent, U.S. and foreign refiners. Its retail competitors include Holiday and Kwik Trip.
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