What is W.W. Grainger 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, W.W. Grainger's Probability of Financial Distress (%) is 0.02%.
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 W.W. Grainger's Probability of Financial Distress (%)
For the Industrial Distribution subindustry, W.W. Grainger'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.
W.W. Grainger's Probability of Financial Distress (%) Distribution in the Industrial Distribution Industry
For the Industrial Distribution industry and Industrials sector, W.W. Grainger's Probability of Financial Distress (%) distribution charts can be found below:
* The bar in red indicates where W.W. Grainger's Probability of Financial Distress (%) falls into.
W.W. Grainger 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 |
| = | -8.42 |
The Probability of Financial Distress (%) (PFD) was then obtianed by:
| PFD | = | 1 | / | (1 + e^(-LPFD)) | * | 100% |
| = | 0.02% |
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).
W.W. Grainger (W.W. Grainger) Business Description
Traded in Other Exchanges
Address
100 Grainger Parkway, Lake Forest, IL, USA, 60045-5201
W.W. Grainger distributes approximately 1.5 million maintenance, repair, and operating products that are sourced from over 4,500 suppliers. The company serves about 5 million customers through its online and electronic purchasing platforms, vending machines, catalog distribution, and network of over 300 global branches. In recent years, Grainger has invested in its e-commerce capabilities and is the 11th-largest e-retailer in North America.
Executives
| Laurie R Thomson |
officer: VP, Controller |
100 GRAINGER PARKWAY, LAKE FOREST IL 60045 |
| Donald G Macpherson |
director, officer: Chairman and CEO |
100 GRAINGER PARKWAY, LAKE FOREST IL 60045 |
| Matt Fortin |
officer: SVP & Chief HR Officer |
100 GRAINGER PARKWAY, LAKE FOREST IL 60045 |
| George S Davis |
director |
100 GRAINGER PARKWAY, LAKE FOREST IL 60045 |
| Rodney C Adkins |
director |
55 GLENLAKE PARKWAY, NE, ATLANTA GA 30328 |
| Katherine D. Jaspon |
director |
130 ROYALL STREET, C/O DUNKIN' BRANDS, INC., CANTON MA 02021 |
| Susan Slavik Williams |
director |
4450 MACARTHUR BLVD., SECOND FLOOR, NEWPORT BEACH CA 92660 |
| Stuart L Levenick |
director |
100 NE ADAMS STREET, PEORIA IL 61629 |
| Neil S Novich |
director |
RYERSON LTULL INC, 2621 W 15TH PLACE, CHICAGO IL 60603 |
| V Ann Hailey |
director |
THREE LIMITED PARKWAY, COLUMBUS OH 43230 |
| Steven Andrew White |
director |
1 HORMEL PLACE, AUSTIN MN 55912 |
| Beatriz R Perez |
director |
ONE COCA-COLA PLAZA, ATLANTA GA 30313 |
| Ernest Scott Santi |
director |
ILLINOIS TOOL WORKS INC., 155 HARLEM AVE., GLENVIEW IL 60025 |
| Lucas E Watson |
director |
100 GRAINGER PARKWAY, LAKE FOREST IL 60045 |
| Paige K Robbins |
officer: Sr. VP (see Remarks) |
100 GRAINGER PARKWAY, LAKE FOREST IL 60045 |
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