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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, Gannett Co's Probability of Financial Distress (%) is 0.12%.
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.
For the Publishing subindustry, Gannett Co'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.
For the Media - Diversified industry and Communication Services sector, Gannett Co's Probability of Financial Distress (%) distribution charts can be found below:
* The bar in red indicates where Gannett Co's Probability of Financial Distress (%) falls into.
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 |
= | -6.69 |
The Probability of Financial Distress (%) (PFD) was then obtianed by:
PFD | = | 1 | / | (1 + e^(-LPFD)) | * | 100% |
= | 0.12% |
The eight explanatory variables are:
1. NIMTAAVG = Net Income to Market Total Assets
NIMTAAVG | = | Net Income | / | Market Total Assets |
= | Net Income | / | (Market Cap + Total Liabilities) |
*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
TLMTA | = | Total Liabilities | / | Market Total Assets |
3. CASHMTA = Cash to Market Total Assets
For non-financial companies, CASHMTA is measured as:
CASHMTA | = | Cash, Cash Equivalents, Marketable Securities | / | Market Total Assets |
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
MB | = | Market Cap | / | Adjusted Book Equity |
= | Market Cap | / | (Total Stockholders Equity + 0.1 * ( Market Cap - Total Stockholders Equity)) |
8. PRICE
PRICE is measured as the log of the stock price, capped at log(15).
Gannett Co (NYSE:GCI) Probability of Financial Distress (%) Explanation
Like the Altman Z-Score, the PFD measures a company's bankruptcy risk in the upcoming year. 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.
Thank you for viewing the detailed overview of Gannett Co's Probability of Financial Distress (%) provided by GuruFocus.com. Please click on the following links to see related term pages.
Laurence Tarica | director | 1345 AVENUE OF THE AMERICAS, NEW YORK NY 10105 |
Michael Reed | director, officer: Chief Executive Officer | C/O NEWM, 1345 AVENUE OF THE AMERICAS, NEW YORK NY 10105 |
Cindy Gallagher | officer: CAO and PAO | C/O GANNETT CO., INC., 7950 JONES BRANCH DRIVE, MCLEAN VA 22107 |
Amy Reinhard | director | C/O GANNETT CO., INC., 7950 JONES BRANCH DRIVE, MCLEAN VA 22107 |
John Jeffry Louis | director | C/O GANNETT CO., INC., 7950 JONES BRANCH DRIVE, MCLEAN VA 22107 |
Vinayak Hegde | director | 9785 S. MONROE STREET, SUITE 300, SANDY UT 84070 |
Debra A. Sandler | director | KEURIG DR PEPPER INC., 53 SOUTH AVE., BURLINGTON MA 01803 |
Theodore Peter Janulis | director | C/O FORTRESS INVESTMENT GROUP, 1345 AVENUE OF THE AMERICAS, NEW YORK NY 10105 |
Mayur Gupta | director | 1345 AVENUE OF THE AMERICAS, 45TH FLOOR, NEW YORK NY 10105 |
Paul J Bascobert | officer: CEO of Gannett Media Corp. | 20 W. KINZIE ST, SUITE 1600, CHICAGO IL 60610 |
Douglas Edward Horne | officer: CFO and CAO | ONE TIME WARNER CENTER, NEW YORK NY 10019 |
Maria M Miller | director | C/O DAVE & BUSTERS, 2481 MANANA DR, DALLAS TX 75220 |
Barbara W. Wall | director | C/O GANNETT CO., INC., 7950 JONES BRANCH DR., MCLEAN VA 22107 |
Kevin M Sheehan | director | DAVE & BUSTER'S ENTERTAINMENT INC., 2481 MANANA DRIVE, DALLAS TX 75220 |
Alison K Engel | officer: Chief Financial Officer | 400 SOUTH RECORD STREET, DALLAS TX 75202 |
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