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The RealReal (The RealReal) Altman Z-Score : -2.97 (As of May. 09, 2024)


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What is The RealReal 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 -3 is in distress zone. This implies bankruptcy possibility in the next two years.

The RealReal has a Altman Z-Score of -2.97, 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 The RealReal's Altman Z-Score or its related term are showing as below:

REAL' s Altman Z-Score Range Over the Past 10 Years
Min: -3.15   Med: -0.27   Max: 7.25
Current: -3

During the past 7 years, The RealReal's highest Altman Z-Score was 7.25. The lowest was -3.15. And the median was -0.27.


The RealReal Altman Z-Score Historical Data

The historical data trend for The RealReal'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.

The RealReal Altman Z-Score Chart

The RealReal Annual Data
Trend Dec17 Dec18 Dec19 Dec20 Dec21 Dec22 Dec23
Altman Z-Score
Get a 7-Day Free Trial 7.25 1.41 -0.27 -1.76 -3.15

The RealReal Quarterly Data
Mar19 Jun19 Sep19 Dec19 Mar20 Jun20 Sep20 Dec20 Mar21 Jun21 Sep21 Dec21 Mar22 Jun22 Sep22 Dec22 Mar23 Jun23 Sep23 Dec23
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 -1.76 -2.62 -3.08 -3.10 -3.15

Competitive Comparison of The RealReal's Altman Z-Score

For the Luxury Goods subindustry, The RealReal'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.


The RealReal's Altman Z-Score Distribution in the Retail - Cyclical Industry

For the Retail - Cyclical industry and Consumer Cyclical sector, The RealReal's Altman Z-Score distribution charts can be found below:

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



The RealReal 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.

The RealReal'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*0.1054+1.4*-2.5052+3.3*-0.3524+0.6*0.5762+1.0*1.2291
=-2.97

* 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 Dec. 2023:
Total Assets was $446.9 Mil.
Total Current Assets was $235.9 Mil.
Total Current Liabilities was $188.9 Mil.
Retained Earnings was $-1,119.6 Mil.
Pre-Tax Income was -21.657 + -22.902 + -41.216 + -82.414 = $-168.2 Mil.
Interest Expense was -2.683 + -2.673 + -2.678 + -2.667 = $-10.7 Mil.
Revenue was 143.373 + 133.172 + 130.855 + 141.904 = $549.3 Mil.
Market Cap (Today) was $432.3 Mil.
Total Liabilities was $750.2 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
=(235.947 - 188.862)/446.923
=0.1054

X2=Retained Earnings/Total Assets
=-1119.625/446.923
=-2.5052

X3=Earnings Before Interest and Taxes/Total Assets
=(Pre-Tax Income - Interest Expense)/Total Assets
=(-168.189 - -10.701)/446.923
=-0.3524

X4=Market Value Equity/Book Value of Total Liabilities
=Market Cap/Total Liabilities
=432.273/750.222
=0.5762

X5=Revenue/Total Assets
=549.304/446.923
=1.2291

The zones of discrimination were as such:

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

The RealReal has a Altman Z-Score of -2.97 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.


The RealReal  (NAS:REAL) 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.


The RealReal Altman Z-Score Related Terms

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


The RealReal (The RealReal) Business Description

Traded in Other Exchanges
Address
55 Francisco Street, Suite 400, San Francisco, CA, USA, 94133
The RealReal is the largest luxury resale platform in the U.S., generating $1.8 billion in 2022 gross merchandise volume and addressing a niche (personal luxury resale) that had previously been serviced by inefficient upscale boutiques and local pawn shops. The firm generates revenue via consignment and first-party sales on its online marketplace, and through direct sales across its brick-and-mortar footprint. With a hands-on approach that actively sources inventory and authenticates every item on its platform, The RealReal is able to justify much higher take rates than peers, working out to roughly 35% of net merchandise value, which excludes returns, cancellations, and first-party sales.
Executives
John E Koryl director, officer: Chief Executive Officer 55 FRANCISCO STREET 4TH FLOOR, SAN FRANCISCO CA 94133
Levesque Rati Sahi officer: Chief Operating Officer 55 FRANCISCO, SAN FRANCISCO CA 94133
Robert J Krolik director 873 SANTA CRUZ AVE, SUITE 206, MENLO PARK CA 94025
Luke Thomas Friang officer: Chief Product & Tech Officer 20614 NE 38TH STREET, SAMMAMISH WA 98074
Todd A Suko officer: Chief Legal Officer and Secy. 7251 WEST 4TH STREET, GREELEY CO 80634
Steve Ming Lo officer: VP, Corporate Controller 55 FRANCISCO ST, 6TH FLOOR, SAN FRANCISCO CA 94133
Robert K. Julian officer: Chief Financial Officer C/O SPORTSMAN'S WAREHOUSE, 7035 SOUTH HIGH TECH DRIVE, MIDVALE UT 84047
James R. Miller director 4050 EAST COTTON CENTER BLVD. 6-68, PHOENIX AZ 85040
Julie Wainwright director, officer: CEO, President and Chairperson C/O THE REALREAL, INC., 55 FRANCISCO STREET, SUITE 600, SAN FRANCISCO CA 94133
Arnon Katz officer: Chief Product & Technology Off 3331 VERDUN AVE, SAN MATEO CA 94403
Matt Gustke officer: Chief Financial Officer 55 FRANCISCO ST, 6TH FLOOR, SAN FRANCISCO CA 94133
Karen Katz director
Fredrik Bjork officer: Chief Technology Officer 55 FRANCISCO ST, 6TH FLOOR, SAN FRANCISCO CA 94133
Baird Gilbert L. Iii director 5075 S. SYRACUSE ST., DENVER CO 80237
Michael Andrew Kumin director C/O GREAT HILL PARTNERS, L.P., 200 CLARENDON STREET, 29TH FLOOR, BOSTON MA 02116