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GRFS (Grifols) Financial Strength : 4 (As of Jun. 2024)


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What is Grifols Financial Strength?

Grifols has the Financial Strength Rank of 4.

Warning Sign:

Grifols SA displays poor financial strength. Usually, this is caused by too much debt for the company.

GuruFocus Financial Strength Rank measures how strong a company's financial situation is. It is based on these factors:

1. The debt burden that the company has as measured by its Interest Coverage (current year). The higher, the better.
2. Debt to revenue ratio. The lower, the better.
3. Altman Z-Score.

Grifols's Interest Coverage for the quarter that ended in Jun. 2024 was 1.25. Grifols's debt to revenue ratio for the quarter that ended in Jun. 2024 was 1.46. As of today, Grifols's Altman Z-Score is 0.87.


Competitive Comparison of Grifols's Financial Strength

For the Drug Manufacturers - General subindustry, Grifols's Financial Strength, along with its competitors' market caps and Financial Strength 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.


Grifols's Financial Strength Distribution in the Drug Manufacturers Industry

For the Drug Manufacturers industry and Healthcare sector, Grifols's Financial Strength distribution charts can be found below:

* The bar in red indicates where Grifols's Financial Strength falls into.



Grifols Financial Strength Calculation

GuruFocus Financial Strength Rank measures how strong a company's financial situation is. It is based on these factors

A company ranks high with financial strength is likely to withstand any business slowdowns and recessions.

1. The debt burden that the company has as measured by its Interest Coverage (current year). The higher, the better.

Note: If both Interest Expense and Interest Income are empty, while Net Interest Income is negative, then use Net Interest Income as Interest Expense.

Interest Coverage is a ratio that determines how easily a company can pay interest expenses on outstanding debt. It is calculated by dividing a company's Operating Income (EBIT) by its Interest Expense:

Grifols's Interest Expense for the months ended in Jun. 2024 was $-218 Mil. Its Operating Income for the months ended in Jun. 2024 was $272 Mil. And its Long-Term Debt & Capital Lease Obligation for the quarter that ended in Jun. 2024 was $8,572 Mil.

Grifols's Interest Coverage for the quarter that ended in Jun. 2024 is

Interest Coverage=-1*Operating Income (Q: Jun. 2024 )/Interest Expense (Q: Jun. 2024 )
=-1*271.703/-217.99
=1.25

The higher the ratio, the stronger the company's financial strength is.

Warning Sign:

Ben Graham prefers companies' interest coverage to be at least 5. Grifols SA interest coverage is 1.34, which is low.

2. Debt to revenue ratio. The lower, the better.

Grifols's Debt to Revenue Ratio for the quarter that ended in Jun. 2024 is

Debt to Revenue Ratio=Total Debt (Q: Jun. 2024 ) / Revenue
=(Short-Term Debt & Capital Lease Obligation + Long-Term Debt & Capital Lease Obligation) / Revenue
=(2882.361 + 8572.456) / 7827.372
=1.46

3. Altman Z-Score.

Z-Score model is an accurate forecaster of failure up to two years prior to distress. It can be considered the assessment of the distress of industrial corporations.

The zones of discrimination were as such:

When Z-Score is less than 1.81, it is in Distress Zones.
When Z-Score is greater than 2.99, it is in Safe Zones.
When Z-Score is between 1.81 and 2.99, it is in Grey Zones.

Grifols has a Z-score of 0.87, indicating it is in Distress Zones. This implies bankrupcy possibility in the next two years.

Warning Sign:

Altman Z-score of 0.87 is in distress zone. This implies bankruptcy possibility in the next two years.

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.


Grifols  (NAS:GRFS) Financial Strength Explanation

The maximum rank is 10. Companies with rank 7 or higher will be unlikely to fall into distressed situations. Companies with rank of 3 or less are likely in financial distress.

Grifols has the Financial Strength Rank of 4.


Grifols Financial Strength Related Terms

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Grifols Business Description

Address
Avinguda de la Generalitat, 152, Parc de Negocis Can Sant Joan, Sant Cugat del Valles, Barcelona, ESP, 08174
As a vertically integrated plasma derivative producer, Spain-based Grifols collects plasma and then manufactures and sells plasma-derived products globally. By acquiring Talecris in 2011, Grifols dramatically expanded its plasma-derived product portfolio, and following the firm's Biotest acquisition in April 2022, the biopharma business contributed 84% of sales in 2023. Grifols also has smaller segments including diagnostics (10% of sales) and biosupplies.