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AVGO (Broadcom) Altman Z-Score : 5.18 (As of Oct. 31, 2024)


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What is Broadcom 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.

Good Sign:

Altman Z-score of 5.37 is strong.

Broadcom has a Altman Z-Score of 5.18, indicating it is in Safe Zones. This implies the Altman Z-Score is strong.

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 Broadcom's Altman Z-Score or its related term are showing as below:

AVGO' s Altman Z-Score Range Over the Past 10 Years
Min: 1.52   Med: 3.3   Max: 5.95
Current: 5.37

During the past 13 years, Broadcom's highest Altman Z-Score was 5.95. The lowest was 1.52. And the median was 3.30.


Broadcom Altman Z-Score Historical Data

The historical data trend for Broadcom'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.

Broadcom Altman Z-Score Chart

Broadcom Annual Data
Trend Oct14 Oct15 Oct16 Oct17 Oct18 Oct19 Oct20 Oct21 Oct22 Oct23
Altman Z-Score
Get a 7-Day Free Trial Premium Member Only Premium Member Only 2.21 2.23 3.52 3.64 5.80

Broadcom Quarterly Data
Oct19 Jan20 Apr20 Jul20 Oct20 Jan21 Apr21 Jul21 Oct21 Jan22 Apr22 Jul22 Oct22 Jan23 Apr23 Jul23 Oct23 Jan24 Apr24 Jul24
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 5.95 5.80 3.58 3.98 4.94

Competitive Comparison of Broadcom's Altman Z-Score

For the Semiconductors subindustry, Broadcom'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.


Broadcom's Altman Z-Score Distribution in the Semiconductors Industry

For the Semiconductors industry and Technology sector, Broadcom's Altman Z-Score distribution charts can be found below:

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



Broadcom 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.

Broadcom'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*0.0043+1.4*-0.0112+3.3*0.0807+0.6*7.7498+1.0*0.2787
=5.18

* 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 Jul. 2024:
Total Assets was $167,966 Mil.
Total Current Assets was $19,947 Mil.
Total Current Liabilities was $19,221 Mil.
Retained Earnings was $-1,875 Mil.
Pre-Tax Income was 2806 + 2005 + 1342 + 3967 = $10,120 Mil.
Interest Expense was -1064 + -1047 + -926 + -405 = $-3,442 Mil.
Revenue was 13072 + 12487 + 11961 + 9295 = $46,815 Mil.
Market Cap (Today) was $792,924 Mil.
Total Liabilities was $102,315 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
=(19947 - 19221)/167966
=0.0043

X2=Retained Earnings/Total Assets
=-1875/167966
=-0.0112

X3=Earnings Before Interest and Taxes/Total Assets
=(Pre-Tax Income - Interest Expense)/Total Assets
=(10120 - -3442)/167966
=0.0807

X4=Market Value Equity/Book Value of Total Liabilities
=Market Cap/Total Liabilities
=792923.702/102315
=7.7498

X5=Revenue/Total Assets
=46815/167966
=0.2787

The zones of discrimination were as such:

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

Broadcom has a Altman Z-Score of 5.18 indicating it is in Safe Zones.

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


Broadcom  (NAS:AVGO) 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.


Broadcom Altman Z-Score Related Terms

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


Broadcom Business Description

Address
3421 Hillview Avenue, Palo Alto, CA, USA, 94304
Broadcom is the sixth-largest semiconductor company globally and has expanded into various software businesses, with over $30 billion in annual revenue. It sells 17 core semiconductor product lines across wireless, networking, broadband, storage, and industrial markets. It is primarily a fabless designer but holds some manufacturing in-house, like for its best-of-breed FBAR filters that sell into the Apple iPhone. In software, it sells virtualization, infrastructure, and security software to large enterprises, financial institutions, and governments.Broadcom is the product of consolidation. Its businesses are an amalgamation of former companies like legacy Broadcom and Avago Technologies in chips, as well as Brocade, CA Technologies, and Symantec in software.
Executives
Charlie B Kawwas officer: SVP & Chief Sales Officer C/O AVAGO TECHNOLOGIES U.S. INC., 350 WEST TRIMBLE ROAD, SAN JOSE CA 95131
Hock E Tan director, officer: President and CEO BROADCOM INC., 1320 RIDDER PARK DRIVE, SAN JOSE CA 95131
Justine Lien director 1320 RIDDER PARK DRIVE, SAN JOSE CA 95131
Mark David Brazeal officer: Chief Legal Officer 1320 RIDDER PARK DRIVE, SAN JOSE CA 95131
Kirsten M. Spears officer: Principal Accounting Officer 1320 RIDDER PARK, SAN JOSE CA 95131
Kenneth Hao director C/O SILVER LAKE PARTNERS, 2775 SAND HILL ROAD, SUITE 100, MENLO PARK CA 94025
Eddy W Hartenstein director
Harry L. You director EMC CORPORATION, 176 SOUTH STREET, HOPKINTON MA 01748
Check Kian Low director 1320 RIDDER PARK DRIVE, SAN JOSE CA 95131
Raul J Fernandez director 11600 SUNRISE VALLEY DR, RESTON VA 20191
Gayla J Delly director 3000 TECHNOLOGY DR, ANGLETON TX 77515
Diane M Bryant director 2200 MISSION COLLEGE BLVD, SANTA CLARA CA 95054
Thomas H. Krause officer: Chief Financial Officer 1320 RIDDER PARK, SAN JOSE CA 95131
Henry Samueli director, officer: Chief Technical Officer 5300 CALIFORNIA AVENUE, IRVINE CA 92617-3038
Bryan Ingram officer: SVP & GM, Wireless Semicon Div C/O AVAGO TECHNOLOGIES LIMITED, 350 WEST TRIMBLE ROAD, BLDG. 90, SAN JOSE CA 95131