What is Textron 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, Textron's Probability of Financial Distress (%) is 0.03%.
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 Textron's Probability of Financial Distress (%)
For the Aerospace & Defense subindustry, Textron'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.
Textron's Probability of Financial Distress (%) Distribution in the Aerospace & Defense Industry
For the Aerospace & Defense industry and Industrials sector, Textron's Probability of Financial Distress (%) distribution charts can be found below:
* The bar in red indicates where Textron's Probability of Financial Distress (%) falls into.
Textron 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 |
| = | -8.22 |
The Probability of Financial Distress (%) (PFD) was then obtianed by:
| PFD | = | 1 | / | (1 + e^(-LPFD)) | * | 100% |
| = | 0.03% |
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).
Textron (Textron) Business Description
Traded in Other Exchanges
Address
40 Westminster Street, Providence, RI, USA, 02903
Textron is a conglomerate that mostly designs, manufactures, and services a range of specialty aircraft including small jets, propeller-driven airplanes, helicopters, and tilt-rotor aircraft. The firm's aviation segment manufactures and services Cessna and Beechcraft planes. Bell is a helicopter and tilt-rotor manufacturer and servicer for both commercial and military customers. Textron Systems produces uncrewed aircraft and armored vehicles for the military market as well as aircraft simulators and training for the commercial and military markets. Textron Industrial contains the Kautex business that manufactures plastic fuel tanks for conventional and hybrid motor vehicles and other subsidiaries that produce specialized vehicles such as golf carts, snowmobiles, and all-terrain vehicles.
Executives
| R Kerry Clark |
director |
C/O THE PROCTER & GAMBLE COMPANY, ONE PROCTER & GAMBLE PLAZA, CINCINNATI OH 45202 |
| Michael X Garrett |
director |
6521 CHIPSTEAD LANE, CHARLOTTE NC 28277 |
| Frank T Connor |
officer: Executive VP and CFO |
40 WESTMINSTER STREET, PROVIDENCE RI 02903 |
| Scott C Donnelly |
officer: Executive VP and COO |
|
| Thomas A Kennedy |
director |
870 WINTER STREET, WALTHAM MA 02451 |
| Richard F Ambrose |
director |
6801 ROCKLEDGE DRIVE, BETHESDA MD 20817 |
| Mark S Bamford |
officer: VP and Corporate Controller |
40 WESTMINSTER STREET, PROVIDENCE RI 02903 |
| E Robert Lupone |
officer: EVP, General Counsel and Secy |
40 WESTMINSTER STREET, PROVIDENCE RI 02903 |
| Kathleen M Bader |
director |
2030 DOW CENTER, MIDLAND MI 49640 |
| Nowell Lionel L Iii |
director |
401 NORTH MAIN STREET, WINSTON-SALEM NC 27101 |
| Julie G Duffy |
officer: Executive VP - Human Resources |
40 WESTMINSTER STREET, PROVIDENCE RI 02903 |
| Deborah L James |
director |
1710 SAIC DRIVE, MCLEAN VA 22102 |
| Ralph D Heath |
director |
6801 ROCKLEDGE DRIVE, BETHESDA MD 20817 |
| Maria T Zuber |
director |
40 WESTMINSTER STREET, PROVIDENCE RI 02903 |
| Cheryl H Johnson |
officer: Executive VP, Human Resources |
40 WESTMINSTER STREET, PROVIDENCE RI 02903 |
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