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Richardson Electronics Ltd  (NAS:RELL) Altman Z-Score: 4.42 (As of Today)

Richardson Electronics Ltd has a Z-score of 4.42, indicating it is in Safe Zones. This implies the Z-Score is strong.

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.

NAS:RELL' s Altman Z-Score Range Over the Past 10 Years
Min: 1.56   Max: 6.21
Current: 4.38

1.56
6.21

During the past 13 years, Richardson Electronics Ltd's highest Altman Z-Score was 6.21. The lowest was 1.56. And the median was 3.11.

Historical Data

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

Richardson Electronics Ltd Annual Data

 May08 May09 May10 May11 May12 May13 May14 May15 May16 May17 Altman Z-Score 5.67 5.33 4.67 3.70 4.00

Richardson Electronics Ltd Quarterly Data

 Nov12 Feb13 May13 Aug13 Nov13 Feb14 May14 Aug14 Nov14 Feb15 May15 Aug15 Nov15 Feb16 May16 Aug16 Nov16 Feb17 May17 Aug17 Altman Z-Score 4.67 4.25 4.39 4.00 4.07

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

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.

Richardson Electronics Ltd'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 * 0.6687 + 1.4 * 0.4357 + 3.3 * -0.0243 + 0.6 * 3.6541 + 1.0 * 0.8942 = 4.42

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

Trailing Twelve Months (TTM) ended in Aug. 2017:
Total Assets was \$157.1 Mil.
Total Current Assets was \$127.6 Mil.
Total Current Liabilities was \$22.6 Mil.
Retained Earnings was \$68.5 Mil.
Pre-Tax Income was -0.048 + -0.133 + -1.441 + -2.189 = \$-3.8 Mil.
Interest Expense was 0 + 0 + 0 + 0 = \$0.0 Mil.
Revenue was 36.995 + 37.359 + 32.313 + 33.827 = \$140.5 Mil.
Market Cap (M) (Today) was \$85.7 Mil.
Total Liabilities was \$23.5 Mil.

 X1 = Working Capital / Total Assets = (Total Current Assets - Total Current Liabilities) / Total Assets = (127.622 - 22.555) / 157.121 = 0.6687

 X2 = Retained Earnings / Total Assets = 68.463 / 157.121 = 0.4357

 X3 = Earnings Before Interest and Taxes / Total Assets = (Pre-Tax Income + Interest Expense) / Total Assets = (-3.811 + 0) / 157.121 = -0.0243

 X4 = Market Value Equity / Book Value of Total Liabilities = Market Cap (M) / Total Liabilities = 85.710 / 23.456 = 3.6541

 X5 = Revenue / Total Assets = 140.494 / 157.121 = 0.8942

The zones of discrimination were as such:

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

Richardson Electronics Ltd has a Z-score of 4.42 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.

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.

Be Aware

Z score does not apply to financial companies.

Related Terms