What is Brown-Forman 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, Brown-Forman's Probability of Financial Distress (%) is 0.04%.
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 Brown-Forman's Probability of Financial Distress (%)
For the Beverages - Wineries & Distilleries subindustry, Brown-Forman'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.
Brown-Forman's Probability of Financial Distress (%) Distribution in the Beverages - Alcoholic Industry
For the Beverages - Alcoholic industry and Consumer Defensive sector, Brown-Forman's Probability of Financial Distress (%) distribution charts can be found below:
* The bar in red indicates where Brown-Forman's Probability of Financial Distress (%) falls into.
Brown-Forman 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 |
| = | -7.86 |
The Probability of Financial Distress (%) (PFD) was then obtianed by:
| PFD | = | 1 | / | (1 + e^(-LPFD)) | * | 100% |
| = | 0.04% |
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).
Brown-Forman (Brown-Forman) Business Description
Traded in Other Exchanges
Address
850 Dixie Highway, Louisville, KY, USA, 40210
Brown-Forman is a U.S.-based manufacturer of premium distilled spirits that generates close to 70% of revenues in the whiskey category, under well-known Tennessee whiskey brand Jack Daniel's and bourbon brands Woodford Reserve and Old Forester. It also manufactures and distributes tequila, vodka, rum, gin, and premium wines. The company generates 47% of sales from its home market, while the bulk of international revenues come from Europe, Australia, and Latin America. The Brown family controls over 50% of the economic interests and a 67% voting power of the company.
Executives
| Elizabeth M Brown |
director |
850 DIXIE HIGHWAY, LOUISVILLE KY 40210 |
| Elizabeth A Smith |
director |
1345 AVENUE OF THE AMERICAS, NEW YORK NY 10105 |
| Mark A. Clouse |
director |
C/O MONDELEZ INTERNATIONAL, INC., THREE LAKES DRIVE, NORTHFIELD IL 60093 |
| Jeremy J Shepherd |
officer: VP, Pres, USA & Canada |
850 DIXIE HIGHWAY, LOUISVILLE KY 40210 |
| Crystal L Peterson |
officer: SVP, Chief Inclusion Officer |
850 DIXIE HIGHWAY, LOUISVILLE KY 40210 |
| Jan Singer |
director |
2 PARK AVENUE, 12TH FLOOR, NEW YORK NY 10016 |
| Timothy M Nall |
officer: SVP CIO |
850 DIXIE HIGHWAY, LOUISVILLE KY 40210 |
| Leanne D Cunningham |
officer: SVP, Chief Fin Officer |
850 DIXIE HIGHWAY, LOUISVILLE KY 40210 |
| Matias Bentel |
officer: SVP, Chief Brands Officer |
850 DIXIE HWY, LOUISVILLE KY 40210 |
| Kelli Nelson |
officer: SVP, Chief Accounting Officer |
850 DIXIE HIGHWAY, LOUISVILLE KY 40210 |
| Mike J. Keyes |
officer: SVP, Chief Corporate Affairs |
850 DIXIE HWY, LOUISVILLE KY 40210 |
| Tracy L Skeans |
director |
1441 GARDINER LANE, LOUISVILLE KY 40213 |
| John V. Hayes |
officer: SVP, Chief Marketing Officer |
850 DIXIE HIGHWAY, LOUISVILLE KY 40210 |
| Michael Andrew Masick |
officer: VP DIR CORP STRATEGY |
850 DIXIE HIGHWAY, LOUISVILLE KY 40210 |
| Kathleen M. Gutmann |
director |
55 GLENLAKE PARKWAY, NE, ATLANTA GA 30328 |
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