Z-score Model Research Articles

The impact of ESG strategies on growth in the logistics industry

The aim of the article is to analyse the relationship between company growth, measured as an increase in Earnings Per Share (EPS) in 3- and 5-year periods, and companies’ financial condition, measured using the Altman z-Score (AS) model. The study was carried out on the example of companies included in the WIG Index and Warsaw Stock Exchange Index (in Polish: Warszawski Indeks Giełdowy – WIG) Environmental, Social, and Governance (ESG) between 2013 and 2020. Furthermore, among the companies included in the WIG index, companies belonging to the logistics industry were distinguished. An analysis of linear and panel relationships was used to verify the nature of the relationships between the variables taken into account. The z-Altman index was found to have a positive effect on company growth in a 3-year period for companies from the transport and logistics industry and all companies included in the WIG ESG index. Regarding company growth over the longer 5-year period, the influence of the z-Altman index on growth was not observed. Therefore, the results for companies in the WIG index show that for company growth in both the 3- and 5-year periods, the financial and economic condition of a company, measured by the z-Altman index, has no impact on the size of this growth, which was also confirmed by panel models.

Financial Performance Evaluation using Financial Distress models with reference to Dabur India Ltd

The global FMCG business is expected to reach close to $15000 billion by 2025 in the current era of e-commerce. Accordingly, FMCG is identified as the fourth-largest sector in India. One of the top businesses in India is Dabur India Ltd. As a result, we tried to evaluate the financial patterns and performance during the previous ten years. The main objective of this study is to assess the financial positions with respect to profitability, solvency, liquidity, etc. For the study, the ratio analysis techniques are employed and Financial Distress of Dabur India Ltd is analysed by Altman's Z-Score Model and Zmijewski Model. The study's overall conclusion unequivocally shows that Dabur is benefiting from positive financial performance across the board. This could assist Dabur India in maintaining a strong market share and a leading position in the FMCG industry.

Adapting Altman Z-score models for early warning signals: Evidence from delisted mining stocks on the Johannesburg Stock Exchange

ABSTRACT The aim of the study is to measure the predictive prowess of adapting the Altman’s Z-score models when used to predict financial health and subsequent delisting of mining companies listed on the Johannesburg Stock Exchange between 1994 and 2021. The study applied Altman’s Z-score models to the financials of listed mining companies to measure the adaptability of the model for predicting the financial health status of mining companies and subsequent delisting in 1-, 2- and 3-years’ time against the actual listing status of each company in the sample over corresponding time horizons. Key findings indicate that both models reliably predict delisting when the horizon is only a year in the future.

Prediksi Kebangkrutan dengan Altman Z-Score dan Springate pada Maskapai Penerbangan Terdaftar di BEI Periode 2016-2023

An airline is a company that offers air transportation services for passengers and cargo. This research aims to analyze bankruptcy predictions for airline companies listed on the Indonesia Stock Exchange (BEI) during the 2016-2023 period using the Altman Z-Score (Modified) model and the Springate model. The research population consists of 12 companies operating in the transportation subsector, focusing on the air transportation industry (airlines). The sample used includes 2 airline companies listed on the IDX, namely PT Garuda Indonesia (Persero) Tbk (GIAA) and PT Jaya Trishindo Tbk (HELI). The data collection technique involves documentation in the form of secondary data, specifically the financial reports of airline companies available on the IDX or each company's website. The results of the study show that PT Garuda Indonesia (Persero) Tbk demonstrates potential bankruptcy according to the Modified Altman Z-Score with an average Z-Score of 0.568. However, this company is considered healthy by Springate with an average S-Score of 0,913. Meanwhile, PT Jaya Trishindo Tbk (HELI) is in a grey area according to the Modified Altman Z-Score with an average Z-Score of 1,101, but shows potential bankruptcy according to Springate with an average S-Score of 0,806.

Bankruptcy Analysis Using the Altman Z-Score Model (Study on Retail Companies Listed on the Indonesia Stock Exchange)

Bankruptcy is a legal or economic event that often results in the complete cessation of all business activities and operations. This bankruptcy usually starts with liquidity problems, but is closely linked to situations where a company's debt exceeds its total assets. The objective of this study is to evaluate the effectiveness of the Altman Z-score model as a tool to predict bankruptcy. The main focus of this study is retail companies listed on the Indonesia Stock Exchange in 2021-2023. 31 companies participated in the study, supported by 93 financial statements. The researchers used purposive sampling method for the sampling process. The study uses the modified Altman Z-score method (1995) to analyze the obtained data. The analysis revealed that 17 companies (54.8%) could be classified as healthy. 3 companies (9.7%) were classified as weak, and 11 companies (36.7%) were expected to go bankrupt. These results provide insight into the financial health of the retail companies surveyed and highlight the importance of using predictive models to determine bankruptcy risk.

Unravelling the CSR-financial distress link: The mediating role of capital structure in Jordan’s financial sector

This study investigates the relationship between corporate social responsibility (CSR), capital structure, and financial distress in Jordan’s financial services sector. It tests the mediating effect of capital structure on the CSR-distress linkage. Utilizing a panel data regression approach, the analysis examines a sample of 35 Jordanian banks and insurance firms from 2015–2020. CSR is evaluated through content analysis of sustainability disclosures. Financial distress is measured using Altman’s Z-score model. The findings reveal an insignificant association between aggregated CSR engagement and bankruptcy risk. However, capital structure significantly mediates the impact of CSR on financial distress. Specifically, enhanced CSR enables higher leverage capacity, subsequently escalating distress risk. The results advance academic literature on the nuanced pathways linking CSR to financial vulnerability. For practitioners, optimally balancing CSR and financial sustainability is recommended to strengthen resilience. This study provides novel empirical evidence on the contingent nature of CSR financial impacts within Jordan’s understudied financial services sector. The conclusions offer timely insights to inform policies aimed at achieving sustainable and stable financial sector development.

Financial Distress: Ratio of Financial Statements of Mining And Metals Companies

This research aims to determine the influence of profitability, leverage and liquidity on financial distress in the mining and metals company sub-sector in Indonesia during the 2018-2022 Period. Profitability is measured using Return on Assets (ROA), leverage is measured by Debt to Equity Ratio (DER), and liquidity is measured using Current Ratio (CR). Financial distress was identified using the Altman Z-score model. This type of research is a quantitative research sampling in this study using purposive sampling techniques and data that has been processed for this study as many as 11 Mining and Metal companies listed on the Indonesia Stock Exchange. The data source in this study uses a secondary data source sourced from the Annual Report published by mining and metals companies listed on the Indonesia Stock Exchange. The data analysis used in this study used Descriptive Satistic analysis, Pooled Data, Chow Test, Hausman Test, Fixed Effect, Partial Test, Determination Coefficient Test (R2). The test results showed that the Return on Asset (ROA) variable, Debt to Equity ratio (DER), did not have a significant effect on financial distress, while the Current Ratio (CR) had a significant effect on financial distress in Mining and Metal Companies listed on the Indonesia Stock Exchange in 2018-2022. The Result of this study is that profitability, leverage, and liquidity significantly affect the condition of financial distress in mining and metals sub-sector companies in Indonesia.

Revitalizing the Forensic Accounting: An Exploratory Study on Mitigating the Financial Risk using Data Analytics

Risk mitigation and fraud prevention in the present times has more focus on digital metadata, wherein forensic accountants are required to make use of robust IT techniques and tools. Data Analytics has got huge implications for forensic accounting. With the ever-increasing electronic element of frauds in the present age of digitalization, and complexity of financial transactions and instruments, the challenges are growing multifold for the forensic accounting profession. The use of data analytics techniques, which enables the processing of large data in almost no time, simplify the task of forensic accountant to a large extent. It enables the identification of patterns and anomalies with the use of machine learning, deep learning, natural language processing, data mining and similar other statistical techniques. Beneish M-score and the Altman Z-score models are proven effective forensic accounting tools in fraud detection and insolvency prediction. This study has been undertaken to test the effectiveness and efficiency of these forensic tools in fraud detection and insolvency prediction with the case study of Bhushan Steel Ltd. Based upon the findings of the study, it is suggested that these models should be integrated with the data analytics, as these are highly effective and efficient in detection of financial statements frauds and this integration would equip the naïve investor in selection of financially sound company(s) to invest in. Data analytics is thus indispensable in the field of forensic accounting in the present era. Since, there is increased funding by many international funding agencies including the World Bank for empowering the forensic accountants and increasing awareness towards this profession, especially in developing countries; it can be hoped that the integration of data analytics with forensic accounting would gain momentum soon.

Factors Influencing Turnaround Success in Financially Distressed Tourism, Hotel, and Restaurant Companies Listed on IDX (2020-2023)

The Covid-19 pandemic has significantly impacted business activities across various industries, leading many companies to face financial distress. Companies opting to continue their business operations may undergo corporate restructuring to sustain and reverse their performance (turnaround). This study aims to analyze the influence of management actions based on restructuring and economic conditions, including expense retrenchment, asset retrenchment, DER ratio, CEO turnover, and GDP, on the success of turnaround in companies experiencing financial distress, with free assets and firm size set as control variables. The Altman Z-Score model will be employed as a measurement of financial distress. This study's subjects are all 37 tourism, hotel, and restaurant companies consistently listed on the Indonesia Stock Exchange from 2020 to 2023. Sample selection utilized purposive sampling techniques, resulting in a sample size of 12 companies observed over three years. Logistic regression analysis will be used to test hypotheses. The research findings indicate that all independent variables positively influence turnaround success, but only expense retrenchment significantly impacts it.

Risk Analysis of Real Estate Enterprises Based on the Z-Score Model

Risk Analysis of Real Estate Enterprises Based on the Z-Score Model

Financial Distress Prediction of Islamic Banks in Top Sukuk-Issuing Countries: An Application of Altman’s Z-Score Model

Financial Distress Prediction of Islamic Banks in Top Sukuk-Issuing Countries: An Application of Altman’s Z-Score Model

Using Z-score models to forecast financial stability in pharmaceutical firms: a case study of SAIDAL

Purpose. This research paper aims to underscore the significance of Z-score models in assessing the financial status of loan applicants “financially distressed” in their relationship with commercial banks “financially solvent” entities. For this purpose, it uses the results of financial analysis, including various financial ratios, allowing for a comparison between the findings of financial equilibrium analysis methods and the results obtained from applying Z-score models. Additionally, it seeks to identify the most suitable Z-score models for the Algerian business environment in terms of detecting cases of financial insolvency and debt default. Results. The results of a comparative empirical study are presented by juxtaposing the use of financial analysis against scoring models in order to evaluate the decision to grant a bank loan, because the firm’s set of specific investments and contracts is related with the part of the financial surplus and financial support entities. The empirical study found that the reliability of Z-score model outcomes is associated with the nature of financial analysis outputs, particularly with the specificity of the estimation model built according to data specific to a particular business environment, e.g. “SAIDAL Group” during 2021–2023 as one of pharmaceutical firm listed company in Algerian stock exchange. This is because the relative weights embodied in the financial ratio parameters relied upon in each estimation model are linked to the study sample within the context of sectorial benchmark ratios of a specific economic environment. A notable congruence emerges between the findings of financial analysis, particularly in the domain of financial equilibrium scrutiny and the improvement of the financial standing of the focal institution, and the results obtained from the assessment of the efficiency of bank lending processes using Z-score models. Scientific novelty. For the evaluation of loans applicant via Z-score based on financial ratios and financial statement, it is necessary to reformulate scoring models to align with the Algerian business environment, given their critical importance in evaluating loan applications from several clients applying for such financial requests, particularly from the perspective of commercial banks. Initially, the author undertook an analysis of Saidal’s financial situation to identify potential insolvency risks. Subsequently, however, through this study, we reassessed its situation after entering into international partnership contracts with international pharmaceutical laboratories. This is particularly significant given the inherent risks associated with pharmaceutical products, including: quick expiration, scientific and technological obsolescence, and intense scientific competition among pharmaceutical factories in the field of innovation, after the Covid-19. Practical value. The study aims to apply Z-scoring models in one of the leading Algerian company in pharmaceutical production “SAIDAL Group”, following an analysis of its financial stability and tracking its financial status before and after the COVID-19 period. Through a comparative approach, the author compared the digital field of institutional failure between the outputs of financial equilibrium analysis and scoring models. In this paper, the author tried to apply Z-scoring models to the accounting information of Saidal Complex after its listing on the Algerian stock exchange, against the backdrop of the Algerian government’s new policy aiming to involve commercial banks as intermediaries in stock market operations, in particular with the inclusion of Algerian Popular Loan Bank in the official market as one of the listed companies, given its leading role in providing investment loans to industrial institutions.

Evaluating the growth rates and financial stability of Al-Thiqa and Al-Mutahida Insurance companies

The research aimed to assess the actual and sustainable growth rates of Al-Thiqa and Al-Mutahida Insurance Companies, while also conducting a comparative analysis of their financial stability to assess their ability to grow without the need for external financing. The study period spans from 2012 to 2016. To accomplish the set objectives, a descriptive-analytical approach was utilized, employing the Ros model for assessing actual and sustainable growth, and the Z-Score model for evaluating financial stability. The outcomes of the study indicated that both companies fell short of the necessary actual growth rate, with Al-Thiqa Insurance Company meeting the sustainable growth rate requirement, unlike Al-Mutahida Insurance Company. Furthermore, disparities in actual and sustainable growth rates between the two companies were identified. In terms of financial stability, it was observed that there was a decline for Al-Thiqa Insurance Company and a reduction to zero for Al-Mutahida Insurance Company. The examination furthermore assessed the financial standing of both companies are focused on increasing their market presence and ensuring their financial stability., thereby aiding in the development of a strategy to enhance the efficiency enhancing Libyan insurance entities to contribute positively to the advancement of the local economy. Keywords: Sustainable growth- actual growth- financial stability- Financial fragility.

Financial Health Analysis and Bankruptcy Prediction of BUMN Karya Listed on IDX in The Midst of Increasing Government Infrastructure Projects Based on The National Medium-Term Development Planning (RPJMN 2020 - 2024)

Concerning the increase in the national infrastructure budget by 6% from the previous year, as well as the emphasis on infrastructure reflected in the RPJMN 2020 – 2024 document, the government has once again appointed construction State-Owned Enterprises (BUMN Karya) as the drivers of national development. Unfortunately, over the past five years, the financial condition of BUMN Karya has deteriorated. Additionally, several directors within these companies have been implicated in corruption cases, damaging the public image and trust in BUMN Karya. This led the IDX to suspend trading in one of its stocks in May 2023. This study aims to evaluate the financial performance and health condition of BUMN Karya listed on the IDX, namely WSKT, WIKA, PTPP, and ADHI. The research methodology is based on the Ministry of SOEs No decree. KEP-100/MBU/2002. Furthermore, this study predicts the financial distress faced by these BUMN Karya from 2019 to 2023 using four methods: Altman Z-Score, Ohlson O-Score, Zmijewski, and Springate The findings indicate the health conditions of each company from 2019 to 2023 as follows: WSKT (BB, CCC, B, BB, B), WIKA (AA, BB, BB, B, CCC), PTPP (BBB, BB, BBB, B), and ADHI (BBB, B, BB, BB, BBB). Among the four predictive methods, the Altman Z-Score model most closely approximates the actual condition in 2024 with an accuracy rate of 65%. The results show that all four SOEs experienced a decline in their Altman Z-Score in 2023. This study complements previous research with a different approach and provides additional insights into the government’s push for infrastructure development and efforts to improve and strengthen the financial condition of BUMN Karya.

Assessing the Financial Health of the Company and its Relationship to its Market Value Added: Evidence from Industrial Companies Listed on the Amman Stock Exchange for the Period (2013-2021)

Purpose: The research aimed to analyze the relationship between the financial health of the company and the market value added assuming a significant correlation between the two variables. Methodology: Financial health was measured based on the Z-Score model while the market value added (MVA) was measured based on the capital invested in the company and the market value of the company. The sample of the study consisted of (8) industrial companies listed on the Amman Stock Exchange for the period (2013-2021). The principal data utilized in the analysis came from the balance sheets and profit and loss reports that were available on the official websites of the research sample companies. Findings: It was revealed through the analysis of the two variables that the company (APOT) shows higher financial health and market value added than the rest of the companies, followed by a number of companies in the research sample that had good financial health and market value added. Results of the analysis of the relationship between the two variables showed a significant positive relationship between the financial health of the company and the market value added, meaning that the better the financial health of the company, the more its market value increases and thus wealth is added to the owners. Unique Contribution to Theory, Practice and Policy: The results of this work can be used to improve the financial performance of companies, which calls for regular evaluation of the financial situation, identification of strengths and weaknesses in one's financial position, and an effort to mitigate risks and correct any shortcomings prior to their representation in the financial statements, The firm must also follow a strong financial strategy to achieve success and sustainability in the financial market.

Analisis Financial Distress dengan Menggunakan Metode Altman Z-Score pada PT. Cahaya Bintang Medan Tbk

This research aims to determine and analiyze the Altman Z-Score mothod in assessing the level of bankruptcy PT. Cahaya Medan Tbk for The 2018- 2021 period and to provide evidence that the altman Z-score method is effectively used in assessing the level of company bankruptcy with a relatively reliable level of precision and accuracy at PT.Cahaya Bintang Medan Tbk for the 2018-2021 period. The type of research used is quantitative descriptive analysis, namely by collecting, clarifying, analyzing and interpreting data obtained from the company so that it can provide a picture of the actual situatuin the calculation technique used in this reseatch is the Altman Z-Score model formula. Based on the results of calculations using the modified Altman Z-Score method from the 2018-2021 period, it shows that PT. Cahaya Bintang Medan Tbk is in the safe zone or safe because the average Z-Score value is above 2,60 or Z2,60

Comparison Analysis of Financial Performance and Financial Distress before and during the Covid-19 Pandemic

The purpose study was to analyze a comparison of financial performance and financial distress before and during the Covid-19 pandemic in the Hotel, Restaurant, and Tourism sub-sector companies listed on the Indonesia Stock Exchange for the 2018-2021 period. In this study, a comparative descriptive method was used with a quantitative approach to test the impact of Covid-19 on financial performance and financial distress. The final sample of this study was 19 companies based on the elimination of the criteria that were only needed in this study. The proxies used to measure financial performance are profitability ratios (ROA, ROE, and NPM), while financial distress uses the Altman Z-Score model. Furthermore, these ratios were tested with a different test using the Wilcoxon sign rank test. The results showed that there were significant differences in the ratios of financial performance which included ROA, ROE, and NPM. Meanwhile, financial distress (Z-Score) also experienced significant differences between before and during the Covid-19 pandemic.

A SURVEY ON MEASURING FINANCIAL DISTRESS PREDICTION USING ALTMAN Z-SCORE MODEL FOR LIFE AND PENSION COMPANIES IN TÜRKİYE

The insurance market is crucial for both the national economy and the financial market. It contributes to the country’s economy by ensuring the healthy operation of the financial industry and protecting it from risk. There are non-life, life, pension, and reinsurance companies operating in the insurance market. This study’s financial failure evaluations were conducted using financial ratios obtained from the financial statements of 17 life and pension insurance companies operating in Turkey between 2019 and 2023. In this context, the Altman Z-Score model is used to assess bankruptcy risk. The Altman Z-Score results for the relevant periods have been calculated using the model established with a total of 4 commonly used ratios, and it has been determined that insurance companies generally fall into the risky zone.

Identifying Fraud Financial Reports Based on Signs of Income Management Using Machine Learning Technology: The Case of Listed Companies in Vietnam

This study aims to use a measure of earnings management to predict companies whose financial statements have problems. This is an identification measure other than common measures to predict financial statement fraud such as measuring by the M-Score or the Z-score model that many previous studies have applied. In the income management measure, the author uses a measure of abnormal cash flow and abnormal expense flow to consider whether the corporate financial statements have problems or not. To do this, the author uses data from listed non-financial enterprises in the period from 2018 to 2022, with machine learning and deep learning algorithms, of which we focus on three main algorithms: ANN, SVM and RF. The results show that identifying problematic financial statements based on abnormal cash flows is quite effective with an accuracy of over 78% for the SVM method, while if using the RF method, the accuracy reaches over 82% but it is required to accept an increased processing time.

Prediksi Financial Distress Model Almant Z-Score, Kinerja Keuangan dan Pengaruhnya terhadap Nilai Perusahaan

The aim of this research is to predict financial distress conditions using the Almant Z-Score model and to test the influence of financial distress and financial performance on company value in basic industrial and chemical sector companies listed on the Indonesia Stock Exchange for the 2017-2021 period. The sample selection technique is purposive sampling method, research data is secondary data obtained from the Indonesia Capital Market Directory for the period 2017 - 2021. The data analysis method used is multiple regression analysis with the eviews 12.0 application tool. The research results show that financial distress and debt to equity ratio (DER) partially do not have a significant effect on company value. Meanwhile, financial performance as proxied by return on assets (ROA) and return on equity (ROE) partially has a positive and significant effect on company value.