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Altman Z-Score for Arista Networks

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ANET: Arista Networks

Arista Networks Inc engages in the development, marketing, and sale of data-driven, client to cloud networking solutions for AI, data center, campus, and routing environments in the Americas, Europe, ...

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USD
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52-week range

Analysis

How does Arista Networks's Altman Z-Score benchmark against competitors?

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We've identified the following companies as similar to Arista Networks because they operate in a related industry or sector. We also considered size, growth, and various financial metrics to narrow down the list to the ones listed below.

Metric Usage: Altman Z-Score

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altman_z_score
Slug
number
Datatype
text
Format
current
Default Period
FY, LTM
Periods Supported
Free
Plan

To view the full list of supported financial metrics please see Complete Metrics Listing.

Similar Metrics

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Metrics similar to Altman Z-Score in the risk category include:

  • Cash And ST Investments / Total Assets - A ratio that measures a company's cash and short-term investments as a percentage of total assets.
  • Long-term Debt / Equity - A ratio that measures the level of the long-term debt relative to the book value of common equity.
  • Net Debt / Equity - A ratio that measures the level of the net debt relative to the book value of common equity. This ratio is also called net gearing ratio.
  • Total Debt / FCF - A ratio that is calculated as Total Debt (including Capital Leases) divided by levered free cash flow.
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Altman Z-Score

Definition of Altman Z-Score

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Altman Z-Score is a formula used to predict the probability that a firm will go into bankruptcy within two years. The original paper by Professor Edward I. Altman can be found here.

The formula for Z-Score is as follows:

Z = 1.2A + 1.4B + 3.3C + 0.6D + 1.0E

A = Working Capital / Total Assets
B = Retained Earnings / Total Assets
C = EBIT / Total Assets
D = Market Value Of Equity / Book Value Of Total Liabilities
E = Sales / Total Assets

For non-U.S. and financial institutions, a modified version of the formula called Z"-Score is used.

Z" = 6.56A + 3.26B + 6.72C + 1.05D + 3.25

A = Working Capital / Total Assets
B = Retained Earnings / Total Assets
C = Operating Income / Total Assets
D = Book Value of Equity / Book Value Of Liabilities

The formula for Z-Score is as follows:

Z-Score:
  Z > 2.99            |   Safe Zone
  2.99 > Z > 1.81     |   Gray Zone
  Z < 1.81            |   Distress Zone

Z"-Score:
  Z > 2.6             |  Safe Zone
  2.6 > Z > 1.1       |  Gray Zone
  Z < 1.1             |  Distress Zone

Click the link below to download a spreadsheet with an example Altman Z-Score calculation for Arista Networks below:

Sector Benchmark Analysis

Sector
Industry Group
Industry
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-640.8-440.8-240.827.92006001,0001,400

The chart above depicts the distribution of altman z-score for companies operating in the Information Technology sector in the Developed economic region. Over 2,490 companies were considered in this analysis, and 2,393 had meaningful values. The average altman z-score of companies in the sector is -8.2 with a standard deviation of 56.7.

Arista Networks's Altman Z-Score of 18.1 ranks in the 95.9% percentile for the sector. The following table provides additional summary stats:

Altman Z-Score In The Information Technology Sector
Economic Risk RegionDeveloped
Total Constituents2,493
Included Constituents2,393
Min-629.6
Max25.9
Median6.1
Mean-8.2
Standard Deviation56.7

You can find companies with similar altman z-score using this stock screener.

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