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Aon (AON) Altman Z-Score : 1.62 (As of Oct. 31, 2024)


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What is Aon Altman Z-Score?

The Altman Z-Score is a model designed to predict the likelihood of a company going bankrupt within the next two years. Created by American finance professor Edward Altman in 1968, the model is specifically designed for publicly traded manufacturing companies with assets greater than $1 million.

Warning Sign:

Altman Z-score of 1.62 is in distress zone. This implies bankruptcy possibility in the next two years.

Aon has a Altman Z-Score of 1.62, indicating it is in Distress Zones. This implies bankrupcy possibility in the next two years.

The zones of discrimination were as such:

When Altman Z-Score <= 1.8, it is in Distress Zones.
When Altman Z-Score >= 3, it is in Safe Zones.
When Altman Z-Score is between 1.8 and 3, it is in Grey Zones.

The historical rank and industry rank for Aon's Altman Z-Score or its related term are showing as below:

AON' s Altman Z-Score Range Over the Past 10 Years
Min: 1.35   Med: 1.72   Max: 1.94
Current: 1.62

During the past 13 years, Aon's highest Altman Z-Score was 1.94. The lowest was 1.35. And the median was 1.72.


Aon Altman Z-Score Historical Data

The historical data trend for Aon's Altman Z-Score can be seen below:

* 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.

* Premium members only.

Aon Altman Z-Score Chart

Aon Annual Data
Trend Dec14 Dec15 Dec16 Dec17 Dec18 Dec19 Dec20 Dec21 Dec22 Dec23
Altman Z-Score
Get a 7-Day Free Trial Premium Member Only Premium Member Only 1.83 1.73 1.80 1.75 1.61

Aon Quarterly Data
Dec19 Mar20 Jun20 Sep20 Dec20 Mar21 Jun21 Sep21 Dec21 Mar22 Jun22 Sep22 Dec22 Mar23 Jun23 Sep23 Dec23 Mar24 Jun24 Sep24
Altman Z-Score Get a 7-Day Free Trial Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 1.82 1.61 1.72 1.35 1.56

Competitive Comparison of Aon's Altman Z-Score

For the Insurance Brokers subindustry, Aon's Altman Z-Score, along with its competitors' market caps and Altman Z-Score 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.


Aon's Altman Z-Score Distribution in the Insurance Industry

For the Insurance industry and Financial Services sector, Aon's Altman Z-Score distribution charts can be found below:

* The bar in red indicates where Aon's Altman Z-Score falls into.



Aon Altman Z-Score Calculation

Altman 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.

Aon's Altman Z-Score for today is calculated with this formula:

Z=1.2*X1+1.4*X2+3.3*X3+0.6*X4+1.0*X5
=1.2*0.0312+1.4*-0.0538+3.3*0.0779+0.6*1.831+1.0*0.2992
=1.62

* 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. GuruFocus does not calculate Altman Z-Score when X4 or X5 value is 0.

Trailing Twelve Months (TTM) ended in Sep. 2024:
Total Assets was $49,885 Mil.
Total Current Assets was $23,653 Mil.
Total Current Liabilities was $22,098 Mil.
Retained Earnings was $-2,682 Mil.
Pre-Tax Income was 449 + 698 + 1424 + 609 = $3,180 Mil.
Interest Expense was -213 + -225 + -144 + -124 = $-706 Mil.
Revenue was 3721 + 3760 + 4070 + 3375 = $14,926 Mil.
Market Cap (Today) was $79,342 Mil.
Total Liabilities was $43,332 Mil.

* Note that for stock reported semi-annually or annually, GuruFocus uses latest annual data as the TTM data.

X1=Working Capital/Total Assets
=(Total Current Assets - Total Current Liabilities)/Total Assets
=(23653 - 22098)/49885
=0.0312

X2=Retained Earnings/Total Assets
=-2682/49885
=-0.0538

X3=Earnings Before Interest and Taxes/Total Assets
=(Pre-Tax Income - Interest Expense)/Total Assets
=(3180 - -706)/49885
=0.0779

X4=Market Value Equity/Book Value of Total Liabilities
=Market Cap/Total Liabilities
=79341.608/43332
=1.831

X5=Revenue/Total Assets
=14926/49885
=0.2992

The zones of discrimination were as such:

Distress Zones - 1.81 < Grey Zones < 2.99 - Safe Zones

Aon has a Altman Z-Score of 1.62 indicating it is in Distress Zones.

Study by Altman found that companies that are in Distress Zone have more than 80% of chances of bankruptcy in two years.


Aon  (NYSE:AON) Altman Z-Score Explanation

X1: The Working Capital/Total Assets (WC/TA) ratio is a measure of the net liquid assets of the firm relative to the total capitalization. Working capital is defined as the difference between current assets and current liabilities. Ordinarily, a firm experiencing consistent operating losses will have shrinking current assets in relation to total assets. Altman found this one proved to be the most valuable liquidity ratio comparing with the current ratio and the quick ratio. This is however the least significant of the five factors.

X2: Retained Earnings/Total Assets: the RE/TA ratio measures the leverage of a firm. Retained earnings is the account which reports the total amount of reinvested earnings and/or losses of a firm over its entire life. Those firms with high RE, relative to TA, have financed their assets through retention of profits and have not utilized as much debt.

X3, Earnings Before Interest and Taxes/Total Assets (EBIT/TA): This ratio is a measure of the true productivity of the firm's assets, independent of any tax or leverage factors. Since a firm's ultimate existence is based on the earning power of its assets, this ratio appears to be particularly appropriate for studies dealing with corporate failure. This ratio continually outperforms other profitability measures, including cash flow.

X4, Market Value of Equity/Book Value of Total Liabilities (MVE/TL): The measure shows how much the firm's assets can decline in value (measured by market value of equity plus debt) before the liabilities exceed the assets and the firm becomes insolvent.

X5, Revenue/Total Assets (S/TA): The capital-turnover ratio is a standard financial ratio illustrating the sales generating ability of the firm's assets.

Read more about Altman Z-Score and the original research.


Be Aware

Altman Z-Score does not apply to financial companies.


Aon Altman Z-Score Related Terms

Thank you for viewing the detailed overview of Aon's Altman Z-Score provided by GuruFocus.com. Please click on the following links to see related term pages.


Aon Business Description

Traded in Other Exchanges
Address
James Joyce Street, Metropolitan Building, Dublin 1, IRL, D01 K0Y8
Aon is a leading global provider of insurance and reinsurance brokerage and human resources solutions. Its operations are tilted toward its brokerage operations. Headquartered in London, Aon has about 50,000 employees and operations in over 120 countries.
Executives
Byron Spruell director 200 EAST RANDOLPH ST., CHICAGO IL 60601
Lisa Stevens officer: Chief People Officer 200 EAST RANDOLPH, CHICAGO IL 60601
Darren Zeidel officer: General Counsel 200 EAST RANDOLPH ST., CHICAGO IL 60640
Lester B Knight director C/O AON CORP, 200 EAST RANDOLPH STREET, CHICAGO IL 60601
Eric Andersen officer: CEO, Aon Benfield 200 EAST RANDOLPH ST., CHICAGO IL 60601
Christa Davies officer: EVP, Global Finance AON CORPORATE LAW DEPT, 200 EAST RANDOLPH ST, 8TH FL, CHICAGO IL 60601
Michael Neller officer: Principal Accounting Officer 200 EAST RANDOLPH ST., CHICAGO IL 60601
Sarah G Smith director C/O GOLDMAN SACHS & CO. LLC, 200 WEST STREET, NEW YORK NY 10282
Mindy F. Simon officer: Chief Operating Officer FOUR EMBARCADERO CENTER, SUITE 2100, SAN FRANCISCO CA 94111
Adriana Karaboutis director C/O BIOGEN IDEC INC., 225 BINNEY ST., CAMBRIDGE MA 02142
Jillian Slyfield officer: Chief Innovation Officer 200 E RANDOLPH ST., CHICAGO IL 60601
J Michael Losh director H.B. FULLER COMPANY, P.O. BOX 64683, ST. PAUL MN 55164-0683
James Platt officer: Chief Operating Officer THE LEADENHALL BUILDING, 122 LEADENHALL ST., LONDON X0 EC3V 4AN
John G Bruno officer: Executive Vice President, CIO
Carolyn Y Woo director 801 E. 86TH AVENUE, MERRILLVILLE IN 4641-