What is Alcoa Probability of Financial Distress (%)?
Probability of Financial Distress (%) measures the probability that a company will go bankrupt in the upcoming year given its current financial position. A higher ratio indicates a larger probability of bankruptcy for the company, while a lower ratio indicates a healthier fundamental. As of today, Alcoa's Probability of Financial Distress (%) is 50.00%.
Like the Altman Z-Score, the PFD measures a company's bankruptcy risk. However, the main drawback of the Z-score is it does not apply to banks and insurance companies. According to Investopedia, the concept of "working capital" does not apply to banks and insurance companies, as financial institutions do not have typical current assets or current liabilities like inventories or accounts payable.
Competitive Comparison of Alcoa's Probability of Financial Distress (%)
For the Aluminum subindustry, Alcoa's Probability of Financial Distress (%), along with its competitors' market caps and Probability of Financial Distress (%) 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.
Alcoa's Probability of Financial Distress (%) Distribution in the Metals & Mining Industry
For the Metals & Mining industry and Basic Materials sector, Alcoa's Probability of Financial Distress (%) distribution charts can be found below:
* The bar in red indicates where Alcoa's Probability of Financial Distress (%) falls into.
Alcoa Probability of Financial Distress (%) Calculation
Probability of Financial Distress (%) (PFD) was developed by John Campbell, Jens Hilscher and Jan Szilagyi in their Search of Distress Risk. It measures the probability that a company will go bankrupt within the next 12 months given its current financial position.
The Probability of Financial Distress (%) was obtained by a logit probability model based on eight explanatory variables. The logit formula to compute the probability of financial distress (LPFD) is given below:
| LPFD | = | -20.12 * NIMTAAVG | + | 1.60 * TLMTA | - | 7.88 * EXRETAVG | + | 1.55 * SIGMA | - | 0.005 * RSIZE | - | 2.27 * CASHMTA | + | 0.070 * MB | - | 0.09 * PRICE | - | 8.87 |
| = | 0.00 |
The Probability of Financial Distress (%) (PFD) was then obtianed by:
| PFD | = | 1 | / | (1 + e^(-LPFD)) | * | 100% |
| = | 50.00% |
The eight explanatory variables are:
1. NIMTAAVG = Net Income to Market Total Assets
*Note that for companies reported quarterly, geometrically declining weighted quarterly Net Income data in latest four quarters are used.
2. TLMTA = Total liabilities to Market Total Assets
3. CASHMTA = Cash to Market Total Assets
For non-financial companies, CASHMTA is measured as:
4. EXRETAVG = Excess Return compared to the S&P 500
EXRETAVG is the weighted excess return compared to the S&P 500 in past 12 month. Geometrically declining weights are imposed on the monthly excess return to reflect lagged information. The weight is halved each quarter.
5. SIGMA = Standard Deviation of Daily Returns
For sigma, we use the annualized standard deviation of a company's returns over the past 92 days (or 63 trading days).
6. RSIZE = Relative Size
| RSIZE | = | log (Market Cap | / | Total Market Cap of S&P 500 companies) |
7. MB = Market to Adjusted Book Equity Ratio
8. PRICE
PRICE is measured as the log of the stock price, capped at log(15).
Alcoa (ARNC.PR.PFD) Business Description
Traded in Other Exchanges
N/A
Address
Arconic Inc, formerly known as Alcoa Inc was first incorporated as the Pittsburgh Reduction Company on October 1, 1888. The Company is engaged in manufacturing and engineering lightweight metals. Its products include aluminum, titanium, and nickel, used in aerospace, automotive, commercial transportation, packaging, building and construction, oil and gas, defense, consumer electronics, and industrial applications. The Company is also engaged in the production and management of aluminum, fabricated aluminum, and alumina combined, through its active participation in all aspects of the industry: technology, mining, refining, smelting, fabricating, and recycling. It has investments and operating activities in, among others, Australia, Brazil, China, Guinea, Iceland, Russia, and Saudi Arabia. The Company operates in segments including Global Rolled Products, Engineered Products and Solutions, and Transportation and Construction Solutions. The Company's Global Rolled Products segment represents its midstream operations. The Engineered Products and Solutions segment represents a portion of the Company's downstream operations. Its downstream portfolio includes two segments Engineered Products and Solutions and Transportation and Construction Solutions. The Engineered Products and Solutions consist of Alcoa Titanium & Engineered Products; Alcoa Fastening Systems & Rings; Alcoa Forgings and Extrusions; and Alcoa Power and Propulsion. The Company's Transportation and Construction Solutions segment represents a portion of its downstream operations. The raw materials used includes bauxite, alloying materials, caustic soda, alumina, electricity, aluminum fluoride, fuel oil, calcined petroleum coke, lime (CaO), cathode blocks, natural gas, electricity, liquid pitch, natural gas, titanium alloys, titanium sponge and resin. The Company's trademark products include Howmet metal castings, Huck fasteners, Kawneer building panels and Dura-Bright wheels with easy-clean surface treatments.
Executives
| Joseph S Cantie |
director |
C/O DELPHI AUTOMOTIVE, 5725 DELPHI DRIVE, TROY MI 48098 |
| Amy E Alving |
director |
ARCONIC INC., 390 PARK AVENUE, NEW YORK NY 10022 |
| Tolga I Oal |
director, officer: Co-Chief Executive Officer |
201 ISABELLA STREET, PITTSTBURGH PA 15212 |
| John C Plant |
director, officer: Chairman and Co-CEO |
C/O MASCO CORPORATION, 17450 COLLEGE PARKWAY, LIVONIA MI 48152 |
| Jody Miller |
director |
225 SOUTH SIXTH STREET, 9TH FLOOR, MINNEAPOLIS MN 55402 |
| James F Albaugh |
director |
C/O THE BOEING COMPANY, 100 NORTH RIVERSIDE PLAZA, CHICAGO IL 60606 |
| Ulrich Schmidt |
director |
PRECISION CASTPARTS CORP., 4650 SW MACADAM AVENUE, SUITE 400, PORTLAND OR 97239 |
| Nicole Weyerhaeuser Piasecki |
director |
2000 WELLS FARGO PLACE, 30 EAST 7TH STREET, SAINT PAUL MN 55101-4930 |
| Robert F Leduc |
director |
UNITED TECHNOLOGIES CORP, 10 FARM SPRINGS ROAD, FARMINGTON CT 06032 |
| David J Miller |
director |
C/O ELLIOTT MANAGEMENT CORPORATION, 40 WEST 57TH STREET, NEW YORK NY 10019 |
| Neil Edward Marchuk |
officer: EVP, HR |
12025 TECH CENTER DRIVE, LIVONIA MI 48150 |
| Katherine H Ramundo |
officer: CLO and Corporate Secretary |
C/O APTIV, 5725 INNOVATION DRIVE, TROY MI 48098 |
| W Paul Myron |
officer: Vice President and Controller |
ALCOA INC., 390 PARK AVENUE, NEW YORK NY 10022-4608 |
| Ken Giacobbe |
officer: CFO |
ALCOA INC., 390 PARK AVENUE, NEW YORK NY 10022-4608 |
| Timothy Donald Myers |
officer: Executive Vice President |
ALCOA INC., 390 PARK AVENUE, NEW YORK NY 10022-4608 |
Alcoa (ARNC.PR.PFD) Headlines
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