An iconic specialty retailer of toys and baby products, Toys "R" Us, Inc. filed for bankruptcy on Sept. 19, 2017. The New Jersey-based giant has heavily cut corporate jobs in 2017 as shopping rapidly shifts from physical stores to online ones. Their adjusted EBITDA was $44 million for Q1 2017, a decline of $35 million compared to the prior year period. Later in the summer, Toys "R" Us sought help to restructure its roughly $400 million in debt due in 2018.
CreditRiskMonitor’s FRISK® score has been warning of financial stress at Toys "R" Us (a "1" for several years prior to 2017, the lowest possible score) compared to the average industry score (between "6" and "7"). Our bankruptcy case study shows how CreditRiskMonitor could have alerted you to the signs of failure before it was too late.
Our FRISK® score model incorporates four powerful risk inputs:
- “Merton”-type model of stock market capitalization and volatility
- Financial ratios, including those used in the Altman Z”-Score Model
- Bond agency ratings from Fitch, Moody's, and DBRS Morningstar
- Website click pattern data from CreditRiskMonitor® subscribers, representing key credit decision-makers at nearly 40% of current Fortune 1000 companies plus thousands of other large companies worldwide
Since the start of 2017, the FRISK® score’s rate of success in capturing public company bankruptcy is 96%. In any given year, you can count on one hand the times we miss – and in those outlier cases, the circumstances deal with unusual, unforeseen events such as natural disasters and CEO fraud.
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About Bankruptcy Case Studies
CreditRiskMonitor® Bankruptcy Case Studies provide post-filing analyses of public company bankruptcies. Our case studies educate subscribers about methods they can apply to assess bankruptcy risk using our proprietary FRISK® score, robust financial database, and timely news alerts.
In nearly every case, a low FRISK® score gave our subscribers early warning of financial distress within a one-year time horizon. Our proprietary FRISK® score predicts bankruptcy risk at public companies with 96% accuracy. The score is formulated by a number of indicators including stock market capitalization and volatility, financial ratios, bond agency ratings from Moody’s, Fitch and DBRS, and crowdsourced behavioral data from a subscriber group that includes nearly 40% of the Fortune 1000 and thousands more worldwide.
Whether you are new to credit analysis or have decades of experience under your belt, CreditRiskMonitor® Bankruptcy Case Studies offer unique insights into the business and financial decline that precedes bankruptcy.