What is Rapid7 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, Rapid7's Probability of Financial Distress (%) is 0.20%.
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 Rapid7's Probability of Financial Distress (%)
For the Software - Infrastructure subindustry, Rapid7'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.
Rapid7's Probability of Financial Distress (%) Distribution in the Software Industry
For the Software industry and Technology sector, Rapid7's Probability of Financial Distress (%) distribution charts can be found below:
* The bar in red indicates where Rapid7's Probability of Financial Distress (%) falls into.
Rapid7 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 |
| = | -6.21 |
The Probability of Financial Distress (%) (PFD) was then obtianed by:
| PFD | = | 1 | / | (1 + e^(-LPFD)) | * | 100% |
| = | 0.20% |
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).
Rapid7 (Rapid7) Business Description
Traded in Other Exchanges
Address
120 Causeway Street, Boston, MA, USA, 02114
Founded in 2000, Rapid7 is a cybersecurity company that began providing vulnerability management solutions. It has, however, expanded its portfolio to provide extended detection and response, or XDR; security information and event management, or SIEM; cloud security, threat intelligence, and application security; and security orchestration, automation, and response, or SOAR. The Boston-based company went public in 2015.
Executives
| Andrew F. Burton |
officer: Chief Operating Officer |
500 UNICORN PARK DRIVE, WOBURN MA 01801 |
| Marc Evan Brown |
director |
C/O RAPID7, INC., 100 SUMMER STREET, BOSTON MA 02110 |
| Thomas Corey E. |
director, officer: President and CEO |
C/O RAPID7, INC., 100 SUMMER STREET, BOSTON MA 02110 |
| Timothy M Adams |
officer: Chief Financial Officer |
311 ARSENAL STREET, WATERTOWN MA 02472 |
| Thomas E Schodorf |
director |
C/O SPLUNK INC, 250 BRANNAN STREET, SAN FRANCISCO CA 94107 |
| Christina Luconi |
officer: Chief People Officer |
C/O RAPID7, INC., 100 SUMMER STREET, BOSTON MA 02110 |
| Peter Kaes |
officer: SVP, General Counsel |
C/O RAPID7, INC., 100 SUMMER STREET, BOSTON MA 02110 |
| Benjamin Holzman |
director, 10 percent owner |
C/O BAIN CAPITAL VENTURES, 335 BRYANT STREET, PALO ALTO CA 94301 |
| Jeffrey Kalowski |
officer: Chief Financial Officer |
10 MAGUIRE ROAD, BUILDING 1, SUITE 125, LEXINGTON MA 02421 |
| Lee David Weiner |
officer: Chief Product Officer |
C/O RAPID7, INC., 100 SUMMER STREET, BOSTON MA 02110 |
| Michael J Berry |
director |
C/O INFORMATICA CORPORATION, 2100 SEAPORT BOULEVARD, REDWOOD CITY CA 94063 |
| Judy Bruner |
director |
C/O SANDISK CORPORATION, 601 MCCARTHY BLVD., MILPITAS CA 95035 |
| Reeny Sondhi |
director |
C/O RAPID7, INC., 120 CAUSEWAY STREET, BOSTON MA 02114 |
| Christina Kosmowski |
director |
C/O RAPID7, INC., 120 CAUSEWAY STREET, BOSTON MA 02114 |
| Timothy P Mcadam |
director, 10 percent owner, other: May be part of a 13(d) group |
250 MIDDLEFIELD RD, MENLO PARK CA 94025 |
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