Journal articles: 'Altman’s Z- score'

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BOĎA, Martin, and Vladimír ÚRADNÍČEK. "THE PORTABILITY OF ALTMAN’S Z-SCORE MODEL TO PREDICTING CORPORATE FINANCIAL DISTRESS OF SLOVAK COMPANIES." Technological and Economic Development of Economy 22, no. 4 (June 27, 2016): 532–53. http://dx.doi.org/10.3846/20294913.2016.1197165.

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The paper challenges the widespread use of Altman’s bankruptcy formula known as the “Z-score model” in Slovak corporate practice and comes with the goal to verify its usability in the Slovak economic environment. To this end, a definition of financial distress is adopted that summarizes weaknesses of Slovak enterprises stemming particularly from liquidity drain and operating losses. The verification juxtaposes three variants of the Z-score model and assesses their prediction ability using a data set of Slovak enterprises for the period from 2009 until 2013. Both the original 1968 Z-score model and the revised 1983 Z-score devised for the US economic environment are compared with the Z-score model re-estimated to the Slovak data copying the methodological procedure of Altman. The results indicate that Altman’s bankruptcy formula is portable into the Slovak economic conditions and useful for predicting financial difficulties in view of the adopted definition of financial distress. Altman’s original and (especially the) revised formulation of the Z-score model are preferable if overall classification accuracy is the main interest. Finally, it is advisable to re-estimate the coefficients of the Z-score model if financially distressed enterprises are the focus and the goal is to classify distressed enterprises as best as possible.

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Bolek, Monika, and Agata Gniadkowska-Szymańska. "The Condition of Companies and their Growth Based on the Example of Companies Included in WIG and DAX Indices." Finanse i Prawo Finansowe 2, no. 30 (June 30, 2021): 25–44. http://dx.doi.org/10.18778/2391-6478.2.30.02.

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The purpose of the article/hypothesis: The paper discusses the problem of condition of companies together with their growth measured by earnings per share, sales, assets and equity. The condition of a company in a capital market is considered good when the goal of the business is achieved, namely the increase of value that occurs with the increase of earnings per share. We assume that the condition of companies measured by Altman’s Z-score Model scores is related to their growth, and ratios applied in this model influence the growth of companies measured by EPS, sales, assets and equity. The research is conducted in two groups of companies, one representing WIG listed entities and the other one comprising DAX listed companies. Methodology: The growth of earnings per share is considered as a measure of companies’ value creation. The growth of EPS should be related to the growth of sales, assets and equity according to the growth theory. To analyze the influence of Altman’s Z-score Model on the growth of EPS, sales, assets and equity, the Pearson and Spearman correlation is applied in the first place. Moreover, logit models are applied to analyze the influence of ratios composing the Altman’s Z-score Model on the growth of EPS, sales, assets and equity. Results of the research: Discriminant models can be applied for the assessment of the economic condition of companies but the interpretation of the results should take into account the fact that risky strategies identified by Altman’s Z-score Model as dangerous are related to the higher growth of earnings per share, therefore, there should be a negative relationship between Altman’s Z-score Model scores and EPS growth and it was confirmed in this study.

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Dr.R.SHANMUGAM, Dr R. SHANMUGAM, and A. MAHALAKSHMI A.MAHALAKSHMI. "Validity of Altman’s Z Score Model in Determining Corporate Sickness Among Indian Companies." Indian Journal of Applied Research 4, no. 4 (October 1, 2011): 100–101. http://dx.doi.org/10.15373/2249555x/apr2014/221.

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Idoge, D. E., and C. O. Chukwuji. "Assessing the Financial Health Status of Small Scale Poultry Businesses in Delta State, Nigeria." Sustainable Agriculture Research 3, no. 4 (August 26, 2014): 9. http://dx.doi.org/10.5539/sar.v3n4p9.

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<p>The study investigated the financial health status of small scale poultry businesses in Delta State, Nigeria using Altman’s Z-score model. The empirical study was undertaken to assess the solvency and hence future survivability of small scale poultry enterprises in the State. Financial data were extracted from three years (2010 – 2012) financial statements of 125 small scale poultry farms purposively selected from farms operating in the State and incorporated with the Nigerian Corporate Affairs Commission as limited liability agribusinesses. Descriptive statistics which include computed financial ratios, frequency distributions, percentages and tables were applied to analyze the content of the financial statements and Altman’s Z-scores’ were computed for each sampled farm for the three year period. The study shows that in 2010, 47.8 percent of farm enterprises had Z-scores between minus 0.60 to 1.55. In 2011 and 2012, 44.8 percent and 42.4 percent, respectively of the farms had Z-scores between negative 0.60 and 1.55. The study further indicates that 28 percent, 27 percent and 30.4 percent in 2010, 2011 and 2012, respectively, of the sampled farms had computed Z-scores between 2.64 and 4.79 farms. The study recommends the use of Altman’s Z-score by small scale investors as a technique for monitoring the financial health of their agribusinesses to prevent the ugly consequences of bankruptcy and liquidation.</p>

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Diakomihalis, Mihail N. "The Accuracy of Altman’s Models in Predicting Hotel Bankruptcy." International Journal of Accounting and Financial Reporting 2, no. 2 (October 14, 2012): 96. http://dx.doi.org/10.5296/ijafr.v2i2.2367.

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This paper studies the bankruptcy predictions for different hotel categories in Greece, aiming to determine the zone of discrimination classified as “certainty” for bankruptcy.It also calculates the differentiation degree of the bankruptcy risk that is owed to the different categorisation of the hotels. The three versions of Altman’s model have been applied to evaluate the bankruptcy prediction and its accuracy between the hotel enterprises that fall in the “distress” zone. Approximately 40 percent of the total firms in the distress zone are evaluated, having a Z 1 score below 1.8, while the percentage for the Z 2 formula is 44.5 percent and 36.3 percent for the Z 3 score. The Z 1 score formula is more precise—with an accuracy rate of 88.2 percent in 2007, one year before bankruptcy—than the Z2 model, which gives a prediction of 83.33 percent for the cutoff zone <0.7, while the Z 3 score reaches 80 percent prediction for the < 0.5 zone. Five and four star hotels show a higher bankruptcy risk than 4-star hotels, while the smaller risk is depicted in 2-star hotels.This paper fulfils the identified need to predict the certainty of bankruptcy among enterprises in the distress zone.

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Sajjan, Rohini. "PREDICTING BANKRUPTCY OF SELECTED FIRMS BY APPLYING ALTMAN’S Z-SCORE MODEL." International Journal of Research -GRANTHAALAYAH 4, no. 4 (April 30, 2016): 152–58. http://dx.doi.org/10.29121/granthaalayah.v4.i4.2016.2767.

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Predication of Bankruptcy is critical task. Early stage of identification of likelihood of solvency may avoid evils in the near future & may shelter the firm from Bankruptcy situation. Bankruptcy of organizations can be predicated by using Altman’s Z-Score Model. This study tries to apply the model to understand the likelihood of Bankruptcy of selected firms for past 5 years from 2011 to 2015 which are listed in BSE & NSE. Companies are selected from manufacturing & non-manufacturing sector. The study reveals that none of the companies completely belongs to Safe Zone except for few years. Most of the firms are in Distress Zone which clearly indicates that these firms may go Bankrupt in near future.

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Putri, Hana Tamara. "The Prediction of Bankruptcy With Altman Z-Score and Springate S-Score Models In Sharia Banks Period 2012-2017." J-MAS (Jurnal Manajemen dan Sains) 4, no. 2 (October 25, 2019): 276. http://dx.doi.org/10.33087/jmas.v4i2.108.

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The Background of this research is to know and to analyze the prediction of company bankruptcy of BUMN Syariah Banks in BEI periods 2012-2017 which focuses object are three companies which have all criteria in analysis by method Z-score Altman and S-Score Springate. As we know, the goal of company is not being bankrupt so that the company needed a method to predict the bankruptcy as soon as possible. This reserch uses Z-Score Altman and S-Score Springate, this methods used to analize financial statements. Goals of this research is to know the potential of bankruptcy, rate of bankruptcy, and insolvensy ranking of BUMN Syariah Banks in BEI periods 2012-2017. Three companies taken as object are Bank Mandiri Syariah, Bank BNI Syariah and Bank BRI Syariah, analyze by using financial statements by the year 2012 to 2070 to find values of variables and then calculated the value of each variable into Altman’s Formula and Springate’s Formula to produce the score.

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Milić, Dragan, Dragana Tekić, Tihomir Novaković, Vladislav Zekić, Milana Popov, and Zlata Mihajlov. "Credit Rating of Agricultural and Food Companies in Vojvodina." Contemporary Agriculture 71, no. 1-2 (May 31, 2022): 51–56. http://dx.doi.org/10.2478/contagri-2022-0008.

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Summary The purpose of this paper is to examine different methods of creditworthiness assessment and bankruptcy prediction in the case of agricultural and food companies in Vojvodina, Serbia. The analysis performed was based on the 2015–2019 financial reports of micro-sized, small-sized and medium-sized agricultural and food companies considered. A total of two models were applied in this study: the Altman’s Z’-score model and the Kralicek’s Quick test. The Altman’s Z’-score model results obtained indicate that the micro-sized agricultural companies were at greater risk of bankruptcy, whereas the small- and medium-sized companies were found stable. However, the Kralicek’s Quick test results obtained show that all the agricultural companies considered had good financial stability and solid businesses. The Altman’s Z’-score model results obtained for the food companies considered indicate that the micro- and small-sized food companies were endangered, whereas the medium-sized food companies were not at risk of bankruptcy. Moreover, the Kralicek’s Quick test results obtained show that all the food companies considered operated successfully with no risk of bankruptcy.

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Ntoung, Lious Agbor Tabot, Felix Puime Guillén, and Miguel Ángel Crespo Cibrá. "The effectiveness of the Spanish banking reform application of Altman’s Z-Score." Risk Governance and Control: Financial Markets and Institutions 6, no. 4 (2016): 40–47. http://dx.doi.org/10.22495/rcgv6i4art6.

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The recent financial crisis which causes bankruptcy around the world, Spain was placed at the top list because of the crucial state of its banking. This lead to a call to ensure adequate bank capitalization and reduce uncertainty regarding the strength of their balance sheets. In the light of recent event, the important of knowing the financial position of banks is imperative to shareholders. Thus, the aim of this study is to affirm the validity of Altman Z”-Score model as a predictors of the uncertainty regarding financial sector in Spain. This study takes into consideration two periods: before the banking reform and after the banking reform. It requires 30 financial institutions in Spain both big as well as small. Ratio analysis was carried out on the 30 banks before and after the reforms for five years prior to their bankruptcy or nationalisation as the Z” Score model has predictive power of up to five years before the reforms.

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Junaeni, Irawati. "Stock Prices Predicted by Bankruptcy Condition?" Binus Business Review 9, no. 2 (July 31, 2018): 105–14. http://dx.doi.org/10.21512/bbr.v9i2.4103.

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This research had two objectives. First, it determined the prediction of the method of Altman Z-Score whether it could classify banking positions, bankruptcy, or financial distress in the go-public bank in Indonesia Stock Exchange. Second, it was to know the influence of value position of Altman Z-Score on the stock price. The population was 84 banking company listed on the Indonesia Stock Exchange in 2010-2015. The sampling method was purposive sampling. Moreover, data analysis method used was a simple regression analysis. For data processing, it used software Eviews 8. The Z-Score calculations predict the potential bankruptcy of go-public bank in 2010-2015. All results show that Z-Score has the small score of 1,81. It can be said there is a potential bankruptcy. For t-test, it can be concluded that Z-Score has the positive and significant effect on the stock price. The ability of Z-Score values in explaining the stock price is 95,50% while the remaining 4,50% is influenced by other variables that are not analyzed in the research. With some weaknesses of Altman’s Z-Score model, this research has the implication for management bank. It improves the financial performance for the future to avoid opportunity bankruptcy prediction. The results show how the effect of bankruptcy on banking stock prices.

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Anggun Minati, Agnes, Gustati, and Hidayatul Ihsan. "Analisis Perbandingan Prediksi Kebangkrutan Bank Syariah Dan Bank Konvensional Menggunakan Altman’s EM Z- Score Model." Akuntansi dan Manajemen 11, no. 2 (December 1, 2016): 1–25. http://dx.doi.org/10.30630/jam.v11i2.90.

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The development of Islamic banks in Indonesia increasingly shows that Islamic banks are ready to become competitors for conventional banks. Islamic banks that use margin systems or profit sharing whereas conventional banks use interest systems give rise to different expectations. It is possible to have a difference in terms of bankruptcy prediction using the Altman EM Z-Score Model ratio. The Altman EM Z-Score Model is a modification of the Altman ratio in 2002 that is used for non-manufacturing companies and has not gone public. This final project aims to analyze the comparison of predictions of bankruptcy of conventional Islamic banks and banks using Altman's EM Z-Score Model for the period 2012-2014. This type of research is descriptive comparative research. The sample used was 11 Islamic Commercial Banks and 23 Conventional Commercial Banks selected using the purposive sampling method. Data analysis techniques use different tests in whitney SPSS version 20. Based on the results of Z '' - Score shows that Indonesian banks are in a healthy state, but Islamic banks are more stable than conventional banks, while the results of whitney test show there are differences in working capital to total assets, retained earnings to total assets, EBIT to total assets, but there is no difference in the book value of equity to total liabilities of Islamic banks and conventional banks.

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Hu, Yaofeng, Zhan Qi, Di Wang, and Yansen Wu. "Empirical Analysis of the Relationship Between Altman’s Z-Score and Stock Performance Based on Airline Companies Listed in the United States." Proceedings of Business and Economic Studies 5, no. 6 (December 27, 2022): 51–58. http://dx.doi.org/10.26689/pbes.v5i6.4529.

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This research looks at any relevance between Altman’s Z-score and the stock market performance of airline companies in the United States (US). Nearly a thousand pieces of data on various aspects of operation and financial status from 81 airline companies in the US are available. Additionally, stock return is used as an indicator of firm stock performance in this paper. In order to satisfy the purpose of determining the relationship between Z-score and stock performance as well as what may be inferred from high stock returns with regard to Z-score, two different regression processes are carried out. The first regression tests the relationship between Z-score and stock return, while the second regression examines whether there is a difference in Z-scores between well-performing airline companies and poorly performing ones using dummy variables. The results reveal that there is a significant positive correlation between the Z-scores of US airline companies and their stock performance; besides, high stock returns potentially imply relatively high Z-scores and vice versa. Therefore, one of the crucial steps that US airline companies must make is to strengthen their balance sheets in order to draw investors to make investments in their businesses.

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Iswandi, Iswandi. "Analisis Potensi Kebangkrutan PT. Berlian Laju Tanker, Tbk. dengan Menggunakan Altman’s Z Score." Binus Business Review 3, no. 2 (November 30, 2012): 654. http://dx.doi.org/10.21512/bbr.v3i2.1350.

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PT. Berlian Laju Tanker, Tbk. (BLTA) is a company engaged in the ocean transportation services listed on the Indonesia Stock Exchange and the Singapore Stock Exchange. In 2009 and 2010 BLTA experienced a net loss. At the end of 2011 the company rocked the financial markets in Indonesia and Singapore being unable to meet financial obligations to financial institutions and corporate bondholders. Given such conditions until the end of August 2012 BLTA can not submit audited financial statement of year 2011 to the authorities of stock exchange and public. By using the 2007 to 2010 audited financial statements and June 2011 inhouse financial statement were analyzed using Altman's Z score model can be known that since 2007 BLTA produce a Z score were classified bankruptcy. Investors should analyze the financial condition by using Z Score in order to minimized shareholders and bondholders potential losses.

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Rahman, Syed Mohammad Khaled, Md Khairul Islam, and Md Mofazzal Hossain. "LEVERAGE INDUCED FINANCIAL DISTRESS OF MANUFACTURING FIRMS IN BANGLADESH: A COMPARISON BETWEEN LISTED MNCS AND DOMESTIC FIRMS BY APPLYING ALTMAN’S Z SCORE MODEL." Indian Journal of Finance and Banking 5, no. 2 (February 27, 2021): 28–43. http://dx.doi.org/10.46281/ijfb.v5i2.1006.

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Financial distress arises from excessive debt capital. The purpose of the study was to determine Altman's Z score and analyze as well as compare the effect of debt on Z scores of listed MNCs & domestic companies of Bangladesh over 24 years (1996-2019). The study was based on secondary data. Seven local companies and seven MNCs were selected as a sample from six manufacturing industrial sectors. It was found that on average one local firm was in the grey zone and the rest 13 firms were in the safe zone (Z scores>2.99). MNCs’ Z scores were significantly higher than that of domestic companies. The grand mean of the Z score of MNCs was 5.398 while that of domestic companies was 4.155. In the case of domestic companies, Z score changes by 0.01 or 0.24% for a 1% change of total debt in opposite direction. MNCs’ Z score decreases by 0.005 or 0.073% for a 1% increase of total debt. Domestic companies should increase Z score by redesigning the capital structure and improving basic earning power. The study has practical implications for corporate managers, policymakers, investors, and government because future strategy, policy, and business performance depend on the zone in which the firms are situated. JEL Classification Codes: G30, G32, G39.

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Nandi, Anita, Partha Pratim Sengupta, and Abhijit Dutta. "Diagnosing the Financial Distress in Oil Drilling and Exploration Sector of India through Discriminant Analysis." Vision: The Journal of Business Perspective 23, no. 4 (October 21, 2019): 364–73. http://dx.doi.org/10.1177/0972262919862920.

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The present study is mainly devoted to the bankruptcy prediction models and their ability to assess a bankruptcy probability for oil drilling and exploration sector of Indian. The study puts an effort to determine the financial health of 12 selected companies from this sector of India for a period of 5 years. These companies serve the backbone of many other industries such as transport industry, manufacturing industry, automobile industry and so on of the Indian economy. The study has taken the reference of Altman’s Z-score model, where ratios such as working capital to total asset, retained earnings to total asset, earnings before interest and tax to total assets, market value of equity to book value of debt and sales to total assets have been taken. The discriminant analysis is conducted to validate the outcomes of Altman’s model to predict group membership and to forecast the overall industry condition. The study reveals that 75 per cent of the companies are in financially healthy zone. The results indicate that working capital/total assets can very well explain the Z-score. The research on financial health using Altman’s score is very limited in Indian context. Therefore, this study will add value to the existing body of literature for financial risk.

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Ghosh, Aniruddha, and Sheeba Kapil. "Is Altman’s Model efficient in predicting bankruptcy? – A comparison among the Altman Z-score, DEA, and ANN models." Journal of Information and Optimization Sciences 43, no. 6 (August 18, 2022): 1191–207. http://dx.doi.org/10.1080/02522667.2022.2117322.

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Wulandari, Desy, Carmidah ., and Adi Wiratno. "Pengaruh Proitabilitas dan Rasio Altman Terhadap Harga Saham ( Studi Pada Perusahaan Pertambangan Yang Go Public Di BEI )." SAR (Soedirman Accounting Review) : Journal of Accounting and Business 2, no. 1 (June 15, 2017): 12. http://dx.doi.org/10.20884/1.sar.2017.2.1.400.

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This study was intended to indentify the impact of the profitability ratio and ratios in model Altman Z-Score on the prices of stocks. The study was conducted at a go public mining company registered at the Indonesia’s Stock Exchange in 2012-2015. The sample included 8 companies which were taken using purposive sampling method. The data used were the secondary data which were in the form of annual financial statements of the company and were collected using data base collection method. The data were analyzed using multiple linear regression analysis supported with SPSS 24.00 program. The result of the study showed that (1) Profitability ratio are proxied by Return On Asset (ROA) did not significantly affect the prices of stocks with sig. 0,088. (2) Altman’s ratios (Z-Score) significantly contributed to the prices of stocks with sig. 0,009.

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Nok, Wong Ming. "Bankruptcy Prediction of Industrial Industry in the UK." SRIWIJAYA INTERNATIONAL JOURNAL OF DYNAMIC ECONOMICS AND BUSINESS 1, no. 1 (September 20, 2017): 1. http://dx.doi.org/10.29259/sijdeb.v1i1.1-26.

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We make comparison between 6 models including (1) Altman’s (1968) z-score; (2) Model 1: z-score model with adjusted coefficients; (3) Model 2: z-score model with modified variables; (4) Model 3: dynamic logic model; (5) Merton distance to default (DD) model (Bharath & Shumway, 2008) and (6) back-propagation network model (Lippman, 1987). We assess the relative information content of these models regarding their bankruptcy prediction capability. Our tests show that dynamic logic model and DD model both provide significantly more information than the others while DD model has the highest prediction accuracy in the out of sample test. It is also worth noticing that altering coefficients and adjusting variables of the original z-score model could not significantly improve the predictive power of z-score model regarding companies in the industrial industry in the UK.

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Nok, Wong Ming. "Bankruptcy Prediction of Industrial Industry in the UK." SRIWIJAYA INTERNATIONAL JOURNAL OF DYNAMIC ECONOMICS AND BUSINESS 1, no. 1 (September 20, 2017): 1. http://dx.doi.org/10.29259/sijdeb.v1i1.7.

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We make comparison between 6 models including (1) Altman’s (1968) z-score; (2) Model 1: z-score model with adjusted coefficients; (3) Model 2: z-score model with modified variables; (4) Model 3: dynamic logic model; (5) Merton distance to default (DD) model (Bharath & Shumway, 2008) and (6) back-propagation network model (Lippman, 1987). We assess the relative information content of these models regarding their bankruptcy prediction capability. Our tests show that dynamic logic model and DD model both provide significantly more information than the others while DD model has the highest prediction accuracy in the out of sample test. It is also worth noticing that altering coefficients and adjusting variables of the original z-score model could not significantly improve the predictive power of z-score model regarding companies in the industrial industry in the UK.

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Srebro, Bosiljka, Bojan Mavrenski, Vesna Bogojević Arsić, Snežana Knežević, Marko Milašinović, and Jovan Travica. "Bankruptcy Risk Prediction in Ensuring the Sustainable Operation of Agriculture Companies." Sustainability 13, no. 14 (July 10, 2021): 7712. http://dx.doi.org/10.3390/su13147712.

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In recent decades, predicting company bankruptcies and financial troubles has become a major concern for various stakeholders. Furthermore, because financially sustainable businesses are affected by numerous highly complex factors, both internal and external, the situation is even more complex. This paper applies Altman’s Z-score models; more precisely, the paper applies the initial Z-score model (a model for manufacturing companies), the Z′-score model (for companies operating in emerging markets), and the Z-score bankruptcy probability calculation. Therefore, this paper offers the results of the application of different Z-score models and the calculation of bankruptcy probability on a sample of agricultural companies listed on the Belgrade Stock Exchange in the period 2015–2019. In addition, different Z-score models are used for the same sample so that the difference between their results and application can be determined. In addition, the validity of the data published in the financial statements of the respective companies was confirmed using the Beneish M-score model with five and eight variables. The results obtained by applying Altman’s Z-score model (initial and adapted to emerging markets) indicate that a certain number of companies had impaired financial stability during the observed period, i.e., that they were in danger of bankruptcy. In addition, based on the results obtained using the Beneish M-score model, it was identified that a number of companies showed signals that indicate possible fraudulent financial reporting. Further, it was found that less than half of the observed companies reported on environmental protection in their annual reports, and they did so by providing a modest amount of information. The originality and value of the paper lies in suggesting that policymakers in the Serbian emerging markets should pay more attention to the operations of companies from the observed sector, as well as to their financial and non-financial reporting. Future research should focus on comparisons with agricultural companies from the same sector whose securities are listed on stock exchanges in the region.

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Khakwani, Maria Shams, Sadia Irshad, Azka Qureshi, Irum Saba, and Sadia Ishaque. "Predicting Bankruptcy Using Z-Score and Z Double Prime (Z”): A Study of Pakistan Stock Exchange." Journal of Accounting and Finance in Emerging Economies 4, no. 1 (June 30, 2018): 47–62. http://dx.doi.org/10.26710/jafee.v4i1.344.

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Due to the unprecedented happenings and dynamic conditions of international economic system, firms are always at the verge of bankruptcy no matter how sound they are, their sustainability is always in jeopardy. Besides, lenders are continuously raising red flags and giving consistent warnings about possible perils of corporate failure due to fragile economic conditions and increasing debt levels in both corporate and individual businesses these days. Hence there was an exigency to ‘develop indicators for monitoring long term progress and sustainability of companies. Thereof it would contribute in illustrating to business analysts, firm stakeholders about the relevance of embracing these active checks for predicting bankruptcy as a sustainable business practice. This created a bizarre cult to look into the matter seriously. For this there is no mantra, no clever feats, sure-fire quick strategies. Instead there are well-defined, simple, systematic and sophisticated models to assess sustainability of companies. Thus, to avoid the tide of massive/substantial corporate failure and any future catastrophe; there is a dire need to identify the most suitable and preeminent model that can truly forecast the likelihood of default ahead of time in given circumstances. And, mainstay of this study is to provide an answer of question in hand by comparing two most venerable model choices i.e. Altman’s Z-score and Z double prime (Z”).

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S, Anandasayanan, and Subramaniam V.A. "PREDICTING BANKRUPTCY OF SELECTED MANUFACTURING COMPANIES LISTED IN COLOMBO STOCK EXCHANGE: APPLYING ALTMAN’S Z-SCORE." International Journal of Research -GRANTHAALAYAH 5, no. 2 (February 28, 2017): 313–21. http://dx.doi.org/10.29121/granthaalayah.v5.i2.2017.1743.

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Bankruptcy is the legal status for an individual or company incapable to pay off outstanding debt. Predication of Bankruptcy is critical task. Early stage of identification of likelihood of solvency may avoid evils in the near future & may shelter the firm from Bankruptcy situation. Bankruptcy of organizations can be predicated by using Altman’s Z-Score Model. This study tries to apply the model to understand the likelihood of Bankruptcy of selected listed manufacturing firms for past 5 years from 2010 to 2014 which are listed in Colombo Stock Exchange. The study reveals that four companies completely belong to Safe Zone for the entire period of study. Three firms are in Distress Zone which clearly indicates that these firms may go Bankrupt in near future.

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Rahman, Mohammad Rifat, Md Mufidur Rahman, and Athkia Subat. "Measuring financial distress of non-bank financial institutions of Bangladesh using Altman’s Z-Score model." International Business Education Journal 13 (August 21, 2020): 15–28. http://dx.doi.org/10.37134/ibej.vol13.sp.2.2020.

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Non-bank financial institutions (NBFIs) are recognized as the fundamental of a financial market as they complement the banking institutions. Since 1981, NBFIs have been playing a vital role in the economic growth of Bangladesh. Unfortunately, in the recent years most of the NBFIs have been found financially distressed. However, few NBFIs that were included in our sample claimed themselves as potential companies with sound financial performance though it was highly criticized. Therefore, the motivation for conducting this study is to examine the financial soundness of selected NBFIs using Altman’s Z score (1995). This study involved 20 NBFIs out of 23 Dhaka Stock Exchange (DSE) listed institutions, which were selected based on information availability by considering A, B and Z categories from 2014 to 2018 period. The secondary data were collected from the annual reports of the selected companies over the period. The findings are as follows: 95% of the 20 NBFIs were in distress zone during the study period and only 5% NBFIs were in safe zone during 2017-2018 period. Therefore, the analysis predicted that within the upcoming years a few of the NBFIs will be approaching bankruptcy. Finally, it is suggested that the government, respective regulatory authority, and policy makers to pay an immediate attention on mitigating the factors affecting the financial distress.

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Chaiyakul, Thitima. "Bankruptcy Risk and Financial Performance of Companies Listed on the Stock Exchange of Thailand." International Journal of Financial Research 12, no. 4 (March 31, 2021): 78. http://dx.doi.org/10.5430/ijfr.v12n4p78.

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Financial performance is an important issue for entrepreneurs and investors. So far the number of studies on the effect of bankruptcy risk on financial performance of firms is small. Hence, this research investigates the impact of bankruptcy risk on financial performance of companies listed on the Stock Exchange of Thailand and the relevant data cover the period between 2015 and 2019. Excluded are companies operating in the finance industry. The data are analyzed by multiple regression analysis. Altman’s Z-score (1968) is used as a proxy for bankruptcy risk while ROA, ROE, and Tobin’s Q serve as proxies for financial performance. The control variables in this study are liquidity, capital structure, firm size, and inflation rate. Results reveal that Altman’s Z-score and firm size statistically and positively affect financial performance proxied by both accounting-based-measures, i.e. ROA and ROE; and market-based measures, i.e. Tobin’s Q. These results confirm that companies listed on Thailand’s Stock Exchange have low bankruptcy risk and large size is financially performed well.

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Rybárová, Daniela, Helena Majdúchová, Peter Štetka, and Darina Luščíková. "Reliability and Accuracy of Alternative Default Prediction Models: Evidence from Slovakia." International Journal of Financial Studies 9, no. 4 (November 30, 2021): 65. http://dx.doi.org/10.3390/ijfs9040065.

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The aim of this paper is to assess the reliability of alternative default prediction models in local conditions, with subsequent comparison with other generally known and globally disseminated default prediction models, such as Altman’s Z-score, Quick Test, Creditworthiness Index, and Taffler’s Model. The comparison was carried out on a sample of 90 companies operating in the Slovak Republic over a period of 3 years (2016, 2017, and 2018) with a narrower focus on three sectors: construction, retail, and tourism, using alternative default prediction models, such as CH-index, G-index, Binkert’s Model, HGN2 Model, M-model, Gulka’s Model, Hurtošová’s Model, Model of Delina and Packová, and Binkert’s Model. To verify the reliability of these models, tests of the significance of statistical hypotheses were used, such as type I and type II error. According to research results, the highest reliability and accuracy was achieved by an alternative local Model of Delina and Packová. The least reliable results within the list of models were reported by the most globally disseminated model, Altman’s Z-score. Significant differences between sectors were identified.

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Pratama, Hendra, and Bambang Mulyana. "PREDICTION OF FINANCIAL DISTRESS IN THE AUTOMOTIVE COMPONENT INDUSTRY: AN APPLICATION OF ALTMAN, SPRINGATE, OHLSON, AND ZMIJEWSKI MODELS." Dinasti International Journal of Economics, Finance & Accounting 1, no. 4 (September 23, 2020): 606–18. http://dx.doi.org/10.38035/dijefa.v1i4.533.

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This study aims to identify and examine the condition of financial distress in the automotive component industry issuers in the period 2014 ~ 2018, using the Altman Z-score, Springate S-score, Ohlson O-score, and Zmijewski X-score against financial ratios as an analysis form of company management to predict the early warnings of company bankruptcy. This study uses quantitative, secondary, and panel data; while the sample uses a non-probability boring sampling technique of 11 companies. The results showed that these four models can predict financial distress by identifying each model. Altman’s model found 8 distress zone points, 16 grey zone points, and 31 safe zone points. Springate’s model found 37 points in the distress zone, and 18 points in the safe zone. Ohlson's model found 3 points in the distress zone, and 52 points in the safe zone. Zmijewski's model found only 1 point in the distress zone

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Malik, Amina, Shahab Ud Din, Khuram Shafi, Babar Zaheer Butt, and Haroon Aziz. "Accounting Discretion, Loan Loss Provision in Financial Distress: Evidence from Commercial Banks." Zagreb International Review of Economics and Business 25, no. 2 (November 1, 2022): 1–18. http://dx.doi.org/10.2478/zireb-2022-0012.

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Abstract This study explores the association between earning management practices and financial distress in commercial banks. Earning management is measured through discretionary loan loss provisions and non-discretionary loan loss provisions. Modified Altman’s Z-score has been used as a proxy for financial distress. Panel regression with fixed and random effect has been employed for empirical analysis. The study finds a significant positive association between DLLP, NDLLP and financial distress in terms of the Altman Z-score. In the case of NDLLP, liquidity reduces the probability of financial distress. Whereas, a bank’s SIZE, LEVG and AQ enhance the likelihood of financial distress. The robustness tests were applied to find the association between NDLLP and FD using logistic regression to validate baseline estimates results of the random effect model. The findings of this study have implications for the policymakers, regulators and internal stakeholders to devise effective regulatory measures for well-informed investment decisions.

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Hamzah, Ruth Samantha, and Mutiara Lusiana Annisa. "Altman’s Z”-Scores for financial distress predictions among food and beverages industry in Indonesia." Owner 6, no. 1 (February 7, 2022): 1056–68. http://dx.doi.org/10.33395/owner.v6i1.696.

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The food and beverage industry is an accelerated sector in Indonesia. They are predicted to be one of the pivotal sectors supporting manufacturing and economic growth. This study aims to predict financial distress on food and beverage industries in Indonesia using Altman's Z”-Score modification model. The samples of this study are 48 firm-year observations in the period of 2018 and 2019. The results show there are 2.1 percent of firms experienced financial distress (Z < 1.10), 2.1 percent of firms was in grey area, i.e., prone to financial distress (Z < 1.10 < 2.60), and 95.8 percent of firms did not experience financial distress. It implies that food and beverage industries in Indonesia is relatively safe if there is no economic shock. Furthermore, the prediction is able to be considered either for stakeholders or shareholders in decision making and financial policies, respectively. Nevertheless, the signal is given for firms that are included in financial distress and grey area.

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Hamid, Tania, Farzana Akter, and Naharin Binte Rab. "Prediction of Financial Distress of Non-Bank Financial Institutions of Bangladesh using Altman’s Z Score Model." International Journal of Business and Management 11, no. 12 (November 20, 2016): 261. http://dx.doi.org/10.5539/ijbm.v11n12p261.

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The Non-Bank Financial Institutions (NBFIs) comprise a rapidly growing segment of the financial system in Bangladesh. They are gaining increased popularity in recent times. They play a vital role in the economy. This study attempts to predict the financial health of 15 publicly traded NBFIsof Bangladesh over five years ranging from 2011 to 2015 using Altman’s Z Score Model (1965). The results show that most of the sampled NBFIs are in ‘Distress’ zone, Some of sample NBFIs are nationally and internationally acclaimed for their outstanding performances and contributions to the industrial as well as economic development of the country, but they fail to attain the minimum score. Most of the companies are lying on the bankruptcy level. Hence, the study suggests the stakeholders, including regulatory authorities and researchers to be more watchful of the operations of NBFIs.

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Meressa, Hayelom Abrha. "Evaluating Financial Distress Condition of Micro Finance Institutions in Ethiopia Using Altman’s Revised Z-Score Model." International Journal of Accounting Research 3, no. 4 (January 2018): 35–42. http://dx.doi.org/10.12816/0044418.

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Qiu, Wanling, Simon Rudkin, and Paweł Dłotko. "Refining understanding of corporate failure through a topological data analysis mapping of Altman’s Z-score model." Expert Systems with Applications 156 (October 2020): 113475. http://dx.doi.org/10.1016/j.eswa.2020.113475.

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Moolman, Anneke Maré. "The Usefulness Of Analytical Procedures, Other Than Ratio And Trend Analysis, For Auditor Decisions." International Business & Economics Research Journal (IBER) 16, no. 3 (June 30, 2017): 171–84. http://dx.doi.org/10.19030/iber.v16i3.9976.

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The International Standards on Auditing require of the external auditor to perform analytical procedures during audits. Analytical procedures range from simple to advanced, but available literature focuses on ratio and trend analysis for use in audits. This study therefore aims to analyse and compare the objective, advantages and disadvantages of selected analytical procedures other than ratio and trend analysis (Du Pont, Economic Value AddedTM (EVA), Altman’s Z-score and Benford’s Law) in an external auditing context by means of a qualitative literature analysis. Findings indicate that further analytical procedures significantly compliment ratio and trend analysis during audits, specifically during going concern evaluations and identifying error and fraud. Du Pont, Altman’s Z-score and Benford’s Law is found to be of particular value to the auditor, due to its cost benefit. EVA is found to be impractical to utilise by the auditor if not implemented by the entity. The study is an important contribution to the literature on analytical procedures as it is the first of its kind to analyse the objective, advantages and disadvantages of analytical procedures other than ratio and trend analysis in an external auditing context.

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Weng Hoe, Lam, Yeoh Hong Beng, Lam Weng Siew, and Chen Jia Wai. "Analysis on the Performance of Technology Companies with Z-score Model." Bulletin of Electrical Engineering and Informatics 7, no. 4 (December 1, 2018): 633–39. http://dx.doi.org/10.11591/eei.v7i4.1353.

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Local technology sector plays a significant role in information and communication technology (ICT) based innovations and applications which enhance organizational performance as well as national economic growth and labor productivity. In this paper, financial performance of the listed Malaysia companies in technology sector is analyzed and evaluated. Altman’s Z-score model is proposed due to its robustness in determining companies’ financial distress level using five financial ratios as variables. The computed Z-score values classify the financial status of the companies into distress, grey and safe zones. This study investigates the financial data of 23 listed technology-based companies in the Main Market of Bursa Malaysia over the period of 2013 to 2017. The findings reveal that the percentage of safe zone companies increase throughout the five years whereas distress zone companies decline. It is concluded that financial ratio for market value of equity to total liabilities is the dominant factor that directly influences the level of financial distress among these technology-based companies in Malaysia. These research outcomes provide an insight to investors or policy makers to develop future planning in order to avoid financial failure in local technology sector.

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Matejić, Tijana, Snežana Knežević, Vesna Bogojević Arsić, Tijana Obradović, Stefan Milojević, Miljan Adamović, Aleksandra Mitrović, et al. "Assessing the Impact of the COVID-19 Crisis on Hotel Industry Bankruptcy Risk through Novel Forecasting Models." Sustainability 14, no. 8 (April 13, 2022): 4680. http://dx.doi.org/10.3390/su14084680.

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In this paper, we assess the impact of the COVID-19 crisis on the bankruptcy risk of a sample of 100 hotel companies and, consequently, on the hotel industry in the Republic of Serbia. The assessment applies to the period, 2019–2026, with the use of the data on the financial indicators for 2015–2020. Five novel structural time-series models, which have the indicators derived from Altman’s EM Z″-score model as predictors, were used, and a new conceptual framework for assessing bankruptcy risk is provided. The framework expands the applicability of credit-risk-scoring models to multiyear predictions, and it takes into account the dynamism of the transitions of the firms among Altman’s risk zones. The predictions that were obtained when the Springate and Zmijewski scores were applied along with the Altman Z″-scores demonstrate the fair applicability of the scores for the models that are introduced here. The results of the models were confirmed by 270 artificial neural networks and they were compared to the results of the classical time-series models. The crisis started to have a negative effect on bankruptcy risk in 2020, and this effect is expected to rise until 2023; currently, in 2022, the highest number of hotel companies may be headed for bankruptcy. Amelioration in the position of the companies cannot be expected before 2024; however, even in 2026, the risk of bankruptcy will remain high when compared to the pre-COVID-19 period and, thus, the surviving companies will become more fragile to any further exogenous changes. These results provide a basis for the adaption of state-supported measures and business policies in order to withstand the crisis and to ensure sustainability.

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Cahyani, Utari Evy, Misnen Ardiansyah, and Sunaryati Sunaryati. "Islamic Social Reporting and Financial Distress In List of Sharia Securities." IQTISHADIA 13, no. 2 (September 24, 2020): 157. http://dx.doi.org/10.21043/iqtishadia.v13i2.7756.

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<p>The number of sharia-approved companies in the Indonesia Stock Exchange is growing rapidly. It is important to see how the social performance of these companies, using Islamic Social Reporting Index (ISR Index). Financial Distress as an early sign of a company’s failure is also important to study. This study examines the relation between ISR Index and financial distress in list of sharia securities. The control variables apply in this research are SIZE, ROA, CR, WCTR, DER, and RETA. By using a sample of 129 companies from financial statements and annual reports (2014-2018), three models were built with the Modified Altmans Z-Score, Ohlson O-Score and Zmijewski Zm-Score as a proxy of financial distress. Based on ISR index calculation, the theme of products and services has the highest disclosure score. The lowest disclosure score is corporate governance theme. Panel data regression results show that ISR Index affects financial distress in the Modified Altman’s model. It means the higher the ISR index value, the greater the likelihood of companies run into financial distress. Whereas in Ohlson’s and Zmijewski’s model, ISR Index has no effect on financial distress.</p>

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Mizan, A. N. K., and Md Mahabbat Hossain. "Financial Soundness of Cement Industry of Bangladesh: An Empirical Investigation Using Z-score." American Journal of Trade and Policy 1, no. 1 (April 30, 2014): 16–22. http://dx.doi.org/10.18034/ajtp.v1i1.357.

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For measuring the financial health of a business firm, there are lots of techniques available. But the Altman’s Z-score has been proven to be a reliable tool across contexts. Bangladesh cement industry is a unique one because, the industry is producing a higher amount of cement than the local demand having no supply of local raw materials. The main objective of the study is to assess the fundamental financial health of this industry using Z-score model. All listed cement firms are considered in this study. The required information has been collected from the annual reports of the selected companies and from other sources. The study revealed that two firms, Heidelberg cement and Confidence Cement, are financially sound whereas other three are not in a good position. The findings of the study can be useful for the managers to take financial decision, the stockholders to choose investment options and others to look after their interest in the concern cement manufacturers of the country.

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Jahan, Kawsar, Mohammod Akbar Kabir, Farjana Nur Saima, and Md Nasim Adnan. "Financial Crises in State Owned and Private Commercial Banks in Bangladesh: A Comparative Analysis." Business and Economic Research 9, no. 2 (May 15, 2019): 146. http://dx.doi.org/10.5296/ber.v9i2.14626.

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Recently the performance of banking industry is one of the much talked issues in the history of Bangladesh. Predicting the factors of financial crises in banks is very much important as this sector is facing a crises moment now. This study examined the driving factors of financial crises in banking sector using panel data consisted of five year observations (2012-2016) for each of 28 PCBs listed in Dhaka Stock Exchange (DSE) and 6 State-Owned Commercial Banks (SCBs). Financial crisis is measured by Altman’s Z-score and Pooled Ordinary Least Square (Pooled OLS) has been applied to find out the factors necessary to condense financial crisis in banks.The study found that SCBs and listed PCBs in Bangladesh are facing financial crisis on the basis of Altman’s Z-score model. Results of the analysis postulated that CRAR, NIIR and NINTR significantly contribute to lessen financial crisis in listed PCBs and also in SCBs. Therefore, the study suggests the regulatory authorities, including stakeholders and researchers to taking into account the findings of the study and to be more alert of the operations of SCBs and PCBs in order to steps forward the performance of this sector as well development of the country in the coming future.

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Stojanović, Tamara, and Ljiljana Drinić. "Applicability of Z-score Models on the Agricultural Companies in the Republic of Srpska (Bosnia and Herzegovina)." АГРОЗНАЊЕ 18, no. 4 (February 22, 2018): 227. http://dx.doi.org/10.7251/agren1704227s.

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The aim of our research was to test the predictability of Altman’s Z-score models in the case of agricultural companies in the Republic of Srpska. Due to the fact that according to these models the companies from the critical zone are supposed to go bankrupt in the near future, while the companies from the safe zone are not supposed to go bankrupt, these two groups of companies have been subject to ex-ante analysis during the period of five years (2011-2015) in order to estimate the predicting efficiency of Z-score models. The authors have also performed the ex-post analysis to see how the bankrupt companies had been classified according to these models in the years preceding their bankruptcy. The results of these analyses show that Z-score models are not reliable in predicting bankruptcy, nor for the creditworthiness analysis, but can be useful in identifying agricultural companies with long-term financial difficulties especially if other, non-financial variables are included.

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AlAli, Musaed S., and Yaser A. AlKulaib. "Exploring the Probability of Bankruptcy for Conventional Insurance Companies Listed at Kuwait Stock Exchange and its Effect on Their Share Prices." Journal of Social Sciences Research, no. 59 (September 25, 2019): 1341–46. http://dx.doi.org/10.32861/jssr.59.1341.1346.

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Insurance is a crucial component of any financial sector, the financial soundness of the insurance sector will result in a healthier financial system in any country. The insurance sector is responsible for transferring risk from one entity to another, for premium, to hedge against any risk of unexpected loss. For that, the insurance sector plays the role of safety net for the whole of the financial system in any country. This study aims to detect the existence of signs of financial failure for conventional insurance companies listed at Kuwait stock exchange (KSE). The study uses the Altman Model to calculate the financial failure indicators. The research also measures the relationship between the financial failure score and the share price of these companies. The analysis is based on the belief that financial reports provide information to investors which can be taken as indicators of the financial failure or success of companies. This information will affect investment decisions which, in turn, will be reflected on the share price. This study is based on the financial data of conventional insurance companies listed at Kuwait stock exchange for the period spanning from 2010 to 2017. A panel data collected from the financial statements of the four conventional insurance companies listed at the stock market were used to calculate the financial failure score for these companies. Ordinary least squared (OLS) regression method, is then used to evaluate the relation between Altman’s z-score and the share price of these companies. Results obtained from this study showed that conventional insurance companies operating in Kuwait had a healthy financial positions and therefore safe from bankruptcy risk. The study also revealed that there was no statistically significant relation between Altman’s score and the share price indicating that the financial failure score does not have an effect on share price of conventional insurance companies listed at Kuwait stock exchange.

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J., Aloy Niresh, and Pratheepan T. "The Application of Altman’s Z-Score Model in Predicting Bankruptcy: Evidence from the Trading Sector in Sri Lanka." International Journal of Business and Management 10, no. 12 (November 19, 2015): 269. http://dx.doi.org/10.5539/ijbm.v10n12p269.

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Prediction of bankruptcy is crucial as the early warning may change entire complications and may avoid the high cost that is associated with distress. The main purpose of this study is to examine the likelihood of bankruptcy of the firms belonging to the Trading Sector in Sri Lanka. The research used data from the financial reports of seven trading companies for a period of the last five years from 2010 to 2014. Altman’s original (1968) bankruptcy model has been applied in order to classify the companies in various levels of financial position namely safe, grey and distress. Findings reveal that 71% of the companies belonging to the Trading Sector were in financial distress and the rest of whole 29% were in the grey zone. The fact that none of the companies lie under the safe zone highlights that as a whole the sector is in a menace.

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Postolov, Kiril, Ivan Milenkovic, Dragana Milenkovic, and Aleksandra Janeska Iliev. "Influence of Market Values of Enterprise on Objectivity of the Altman Z-Model in the Period 2006-2012: Case of the Republic of Macedonia and Republic of Serbia." Journal of Central Banking Theory and Practice 5, no. 3 (September 1, 2016): 47–59. http://dx.doi.org/10.1515/jcbtp-2016-0019.

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Abstract The Altman’s model is a multiple discriminant analysis bankruptcy model that uses ordinarily accepted criteria that may provide a useful decision rule to predict financial distress in firms. In this research, we outline the construction and interpretation of the Z-Score influenced by the stock movement for the period of six years in the Republics of Macedonia and Serbia. Research focuses determining the influence of the market value of companies and if it could be related to potential bankruptcy of companies at specific markets.

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Jahan, Ishrat, and Fareen Zaman. "Analysis of the Financial Soundness of Footwear Industry in Bangladesh: An Empirical Study using Z-score." Global Disclosure of Economics and Business 6, no. 1 (June 30, 2017): 51–60. http://dx.doi.org/10.18034/gdeb.v6i1.116.

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Among all the available statistical techniques, Altman’s Z-score is found to be the most reliable technique to measure the financial soundness of any given business organization. In this paper, we have selected footwear industry which is the second largest foreign currency earner in Bangladesh. This industry is contributing in a greater scale to the economy of our country. The prime objective of this study is to assess the financial heath, i.e. analyze the probability of bankruptcy of the listed companies of the footwear industry. We have studied the financial statements of five companies listed in the stock exchange for a period of 2011 to 2015. The study revealed that the footwear industry overall is in a safe position i.e. financially sound, showing two of the selected companies in the safe zone, one in the grey zone and two in the distress zone. The findings of the study will help different groups of stakeholders to make decisions regarding their investments and other choices, considering the soundness of this specific industry.

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Meshram, Madhura M., and Chetana Soni. "A Study on Prediction of Bankruptcy of selected Indian Power Sector Companies: An Application of Altman’s Z-score Model." International Journal of Management 08, no. 01 (2020): 01–09. http://dx.doi.org/10.35620/ijm.2020.8101.

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Olyvia, Yolla Haja, and Rindang Matoati. "Kinerja Keuangan pada PT Garuda Indonesia (Persero) Tbk Periode 2013-2017." Jurnal Manajemen dan Organisasi 10, no. 3 (January 20, 2020): 182–96. http://dx.doi.org/10.29244/jmo.v10i3.30152.

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The growth of the national aviation industry has been quite rapidly in last view times. Along with this condition, there are only few of airline companies are able to survive, which are supported by strong financial conditions and good corporate management. PT Garuda Indonesia (Persero) Tbk a flag carrier that is able to maintains its existence until now. This study aims to analyze the financial performance of PT Garuda Indonesia (Persero) Tbk for the period of 2013-2017 using financial ratio analysis based on minister of BUMN decree number: KEP-100 / MBU / 2002, trend analysis and analysis of the potential bankruptcy of the Altman’s Z-Score model. The data analysis method used in this study was descriptive quantitative. Data processing was performed using Microsoft Excel 2013 and Minitab 17 software. The results of the study indicate financial performance of PT Garuda Indonesia (Persero) Tbk for the period 2013-2017 tends to decrease and the value of Z-Score obtained has great potential for bankruptcy.

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Ravi Singla and Gurmeet Singh. "Assessing the Probability of Failure by Using Altman’s Model and Exploring its Relationship with Company Size: An Evidence from Indian." Journal of Technology Management for Growing Economies 8, no. 2 (October 23, 2017): 167–80. http://dx.doi.org/10.15415/jtmge.2017.82003.

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Corporate failure is the situation when a firm becomes unable to pay debts when they come due and the market value of assets becomes lower than its total liabilities. The purpose of the paper is to explore the relationship between firm size and probability of failure for Indian steel sector companies by employing regression model. Altman’s Z-score model has been used to derive the firm’s probability of failure, whereas total assets and total sales are utilized as indicators for firm’s size. The results indicate that size is inversely related to the probability of failure. With an increase in the size of the firm; probability of failure decreases and vice-versa.

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M.B., Raghupathy. "Amtek Auto – financing under distress." Emerald Emerging Markets Case Studies 11, no. 4 (December 15, 2021): 1–42. http://dx.doi.org/10.1108/eemcs-03-2021-0071.

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Learning outcomes The primary teaching objective is to discuss the capital raising efforts of a firm under financial distress. It also provides supporting data to calculate cost of capital, DuPont/modified DuPont values and Altman’s Z-Score that can appropriately be incorporated into the discussion. Case-B provides information and data of the company’s recent performance and to changes in bankruptcy law in India. Overall, this case study provides ample scope to discuss, understand and provide the solution to the following key corporate finance themes as follows: 1. Analyzing accounting statements and examine potential earnings quality issue. 2. Predicting default and bankruptcy using qualitative analysis, financial ratios, traditional and modified DuPont models and Altman’s Z score model. 3. Examining the capital raising efforts of a distressed firm, which has already defaulted on borrowings. 4. To explore the impact of changes in regulation on the turnaround efforts of the firm as well as on the promoters of the firm. Case overview/synopsis Since 2005, Amtek Auto moved at a breathtaking speed with the goal of reaching $10bn in sales, from the current level of about $1.2bn. The group had acquired more than a dozen companies spending about Rs.5,000cr. ($850m) during this period primarily through borrowed funds. However, the market and business expansion was not happening as expected. The company’s capacity utilization was just about 40% (approx.) during much of this period. The mounting fixed costs of operation and debt servicing grew to the level of unsustainability, led the firm to default on its borrowing. Now the company had to quickly recapitalize itself to run its operations and retain the premier position in auto component industry. The company and its promoters were considering various methods of debt restructuring, asset sale and further equity infusion. Complexity academic level Introductory and elective level corporate finance. Supplementary materials Teaching notes are available for educators only. Subject code CSS 1: Accounting and Finance.

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Ranjithkumar, Dr S., and Dr R. Mahesh. "Evaluating Financial Strengths of Selected PSU Steel Companies." Webology 18, Special Issue 03 (April 29, 2021): 349–57. http://dx.doi.org/10.14704/web/v18si03/web18045.

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Recent economic changes facilitated the Steel sector to ignore the Reserve quotation for PSU to get a wave from mandatory. The six major role players in Indian steel sector equally qualified to world class iron makers out of 36 in the world. In 2018, steel utility was about to grow at the rate of 5.7% year-on-year 9.2% Metric Tons. Our country anticipated to beat Japan to predominant in iron production at the earliest. But, few iron PSUs in India still struggle to sustain with Industry growth. With this aim, the financial performances of seven selected PSU companies are predicted through Altman’s Z- score.

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Mućko, Przemysław, and Adam Adamczyk. "Does the bankrupt cheat? Impact of accounting manipulations on the effectiveness of a bankruptcy prediction." PLOS ONE 18, no. 1 (January 17, 2023): e0280384. http://dx.doi.org/10.1371/journal.pone.0280384.

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The aim of this article is to answer the question whether the unreliability of the Altman bankruptcy prediction model may be caused by manipulations in financial statements. Our study was carried out on a group of 369 bankrupt Polish companies, with the research period covering the years 2011–2020. In the study, we divided the companies into two groups: those correctly classified by Altman’s model as at risk of bankruptcy, and companies for which the model did not indicate a significant bankruptcy risk. Using a logit model, we tested whether the probability of companies being correctly classified as failed depends on the risk of a manipulation of financial statements. We use Benford’s law to measure the risk of a manipulation of financial statements. We also repeated our study using panel data models. Our analyses show that the manipulation of financial statements is not the cause of the inaccurate predictions of the Altman model. On the contrary, the results of the analyses indicate that manipulations occurs for companies with a lower Z-score and therefore a worse financial situation. This means that a deterioration in the quality of financial statements can be a signal of an increasing probability of bankruptcy.

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Sina, Md Abu, Md Nazmul Huda, Hamayet Hossain, and Md Abdus Sabur. "Identification of Sickness of Some Selected Garment Factories in Bangladesh and Its Remedial Measures: An Application of Altman’s Z-Score Model." American Journal of Industrial and Business Management 10, no. 12 (2020): 1823–38. http://dx.doi.org/10.4236/ajibm.2020.1012113.

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Khan, Khalid Mumtaz, and Naeem Ullah. "Post COVID-19 financial distress in Pakistan: Prediction of corporate defaults at Pakistan Stock Exchange." Liberal Arts and Social Sciences International Journal (LASSIJ) 5, no. 1 (June 23, 2021): 286–400. http://dx.doi.org/10.47264/idea.lassij/5.1.25.

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COVID-19 has slowed down the global economic activity. This slowdown is expected to turn into an economic recession, where firms are expected to experience financial distress leading to corporate defaults. Predicting such defaults is important to safeguard the stakeholders’ interest in the financial markets. This study has estimated the extent of financial distress among the firms listed at PSX and constituting KSE 30 index, by using Altman’s Z-Score. The score has been computed using the financial statements of year 2019-20, and on the proforma financial statements for year 2019-20 and 2020-21. These financial years are considered as pre and post COVID-19 closing dates respectively for the financial statements. The proforma financial statements have been drawn for financial year 2019-20 and 2020-21 using established accounting conventions of prudence, conservatism, substance over form, and foreseeable future. The results of Z-score in pre and post COVID-19 have been compared to assess the change in degree of financial distress among the selected firms. A significant increase in the degree of financial distress has been observed, which may lead to an increased number corporate default for the firms listed at PSX. The firms and corporate regulators need to curtail the rate of corporate defaults.

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Journal articles on the topic 'Altman’s Z- score'

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