Abstract
Financial distress is a condition in which a company cannot create sufficient income, thus making it unable to meet its financial obligations. Ignoring signs of financial distress can be detrimental for the companies, and it may even cause bankruptcy. The financial distress is about financial health of a company and credit rating is a good early warning indicator of financial health. This paper attempts to investigate the financial health of health sector in Turkey for the period from 2000 to 2020. In order to evaluate financial health of the health sector in Turkey, we use Central Bank of Republic of Turkey’s Company Accounts and calculate credit ratings via Altman Z- Score Methodology. The basic conclusion of the paper is that although the credit rating is not sufficient for investors, there are some improvements in the rating grades.
Highlights
The health sector may be the key element of sustainable economic growth for Turkey because of its considerable service quality
It is important for many issues such as managerial decision-making for firms, investment decision-making for investors, credit decision making for lenders, customer credit rating for banks (Sun et al, 2014)
In order to deal with financial failure in the health sector, it is vital to have a specific management approach which focuses on early warning indicators such as Altman Z-Score
Summary
The health sector may be the key element of sustainable economic growth for Turkey because of its considerable service quality. The healthy company experience a financial distress condition which a company cannot generate enough cash via its income, so cannot meet or pay its financial obligations. Financial distress forecasting has been used since the 1960s as a critical area of financial research in corporate finance literature It is important for many issues such as managerial decision-making for firms, investment decision-making for investors, credit decision making for lenders, customer credit rating for banks (Sun et al, 2014). According to table 1, one can understand that once the credit risk diminishes, the rating moves on the opposite direction To this end, we try to grasp that “how healthy company looks like from the financial perspective”. If a company does not experience financial distress, it can have higher rating grade it is a healthy company regarding to financial criteria. We are going to analyze literature about this methodology, at the final phase we are going to give information about results of our empirical analysis and are going to make discussion about future research
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