What is Reynolds American 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, Reynolds American's Probability of Financial Distress (%) is 0.00%.
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 Reynolds American's Probability of Financial Distress (%)
For the Tobacco subindustry, Reynolds American'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.
Reynolds American's Probability of Financial Distress (%) Distribution in the Tobacco Products Industry
For the Tobacco Products industry and Consumer Defensive sector, Reynolds American's Probability of Financial Distress (%) distribution charts can be found below:
* The bar in red indicates where Reynolds American's Probability of Financial Distress (%) falls into.
Reynolds American 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% |
| = | 0.00% |
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).
Reynolds American (Reynolds American) Business Description
Traded in Other Exchanges
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Reynolds American controls roughly one third of the U.S. cigarette market and is the second-largest domestic cigarette manufacturer behind Altria. Its brands include Camel, Pall Mall, and Newport. Reynolds also owns the Grizzly and Kodiak smokeless tobacco brands. Another subsidiary, Santa Fe Natural Tobacco, manufactures superpremium Natural American Spirit cigarettes. In 2013, Reynolds entered the electronic cigarette market with its Vuse brand, which captured a significant share of this small but growing market.
Executives
| John J Zillmer |
director |
ARAMARK CORP, 1101 MARKET ST, PHILADELPHIA PA 19107 |
| Debra Ann Crew |
officer: President and CEO |
STANLEY BLACK & DECKER, INC., 1000 STANLEY DRIVE, NEW BRITAIN CT 06053 |
| Ronald S Rolfe |
director |
825 8TH AVENUE, 38TH FLOOR, NEW YORK NY 10019 |
| Nowell Lionel L Iii |
director |
401 NORTH MAIN STREET, WINSTON-SALEM NC 27101 |
| Holly K Koeppel |
director |
401 NORTH MAIN STREET, WINSTON-SALEM NC 27101 |
| Susan M. Cameron |
director |
C/O TUPPERWARE BRANDS CORP, PO BOX 2353, ORLANDO FL 32802-2353 |
| Murray S Kessler |
director |
714 GREEN VALLEY ROAD, GREENSBORO NC 27408 |
| Nana Mensah |
director |
1301 AVENUE OF THE AMERICAS, NEW YORK NY 10019 |
| Thomas C Wajnert |
director |
401 NORTH MAIN STREET, WINSTON SALEM NC 27102 |
| Richard E Thornburgh |
director |
401 N. MAIN STREET, WINSTON-SALEM NC 27101 |
| Nicholas V Scheele |
director |
FORD MOTOR COMPANY, ONE AMERICAN ROAD, DEARBORN MI 48126 |
| Betsy S Atkins |
director |
|
| Joseph P Viviano |
director |
4351 GULF SHORE BLVD. N, 17N LERIVAGE, NAPLES FL 34103 |
| Monteiro De Castro Antonio |
director |
BRITISH AMERICAN TOBACCO - GLOBE HOUSE, 4 TEMPLE PLACE, LONDON X0 WC2R2PG |
| Chain John T Jr |
director |
401 N. MAIN ST., C/O RJ REYNOLDS TOBACCO HOLDINGS, WINSTON SALEM NC 27102 |
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