Diagnosing the Financial Distress in Oil Drilling and Exploration Sector of India through Discriminant Analysis

2019 ◽  
Vol 23 (4) ◽  
pp. 364-373
Author(s):  
Anita Nandi ◽  
Partha Pratim Sengupta ◽  
Abhijit Dutta
Keyword(s):  
Discriminant Analysis ◽  
Manufacturing Industry ◽  
Prediction Models ◽  
Bankruptcy Prediction ◽  
Total Asset ◽  
Financial Health ◽  
Z Score ◽  
Working Capital ◽  
Oil Drilling ◽  
Retained Earnings

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.

scholarly journals Analysis Of Financial Health Level On Financial Performance In Cement Companies Listed On The Indonesian Stock Exchange (Idx)

2020 ◽  
Vol 18 (3) ◽  
pp. 125
Author(s):  
Dhea Zatira ◽  
Ria Puspitasari
Keyword(s):  
Financial Performance ◽  
Stock Exchange ◽  
Market Value ◽  
Financial Health ◽  
Z Score ◽  
Working Capital ◽  
Book Value ◽  
Panel Data Regression ◽  
Data Regression ◽  
Retained Earnings

This study aims to analyze the Level of Financial Soundness on Financial Performance in Cement Companies that are Go Public Listed on the Indonesia Stock Exchange (BEI). Analysis of the level of financial health using the Altman Z-Score with several ratios, namely the ratio of Working Capital to Total Assets (X1), the ratio of retained earnings to total assets (X2), the ratio of EBIT to Total Assets (X3), the ratio of stock market value to book value ofabilities (X4), the ratio of Sales to Total Assets (X5) to the dependent variable on Financial Performance (Return on Assets). The data analysis technique used in this research is the Altman Z-Score with the criteria for bankruptcy and to find its effect with the panel data regression model assisted by E-Views software. The results of the calculation and analysis of the Z-Score criteria in cement companies in Indonesia, it is known that there is no cement company whose company finances are stated in a healthy condition. One company is prone to bankruptcy (gray zone) while the rest according to the Z-Score criteria are bankrupt. Furthermore, based on the panel data regression examiner simultaneously the five independent variables on financial performance (Y), while partially the working capital ratio to total assets (X1) affects financial performance (Y), the retained earnings ratio to total assets (X2) has no effect on Financial performance (Y), EBIT ratio to total assets (X3) affects financial performance (Y), stock market value ratio to book value of liabilities (X4) has no effect on financial performance (Y), Sales to Total Assets ratio (X5) affect financial performance.

Bankruptcy Prediction for Financial Sector of Pakistan: Evaluation of Logit and Discriminant Analysis Approaches

2018 ◽  
Vol 6 (2) ◽  
Author(s):  
Usama Ehsan Khan
Keyword(s):  
Discriminant Analysis ◽  
Balance Sheet ◽  
Bankruptcy Prediction ◽  
High Rate ◽  
Total Asset ◽  
Business Failure ◽  
Multiple Discriminant Analysis ◽  
Financial Firms ◽  
Retained Earnings ◽  
Accounting Ratios

<p>Bankruptcy prediction is one of the core area in finance that is quite rich in empirical and theoretical work. This study compares two models for measuring the financial position of financial firms listed in Karachi Stock Exchange. The study gives a comprehensive review of two models, namely Altman’s [1] Z-score and an O-Score derived from Ohlson [14]. The purpose of this paper is two folded. First to identify unique characteristics of business failure and to compare effective variables responsible for this response. Secondly to compare two popular accounting-based measures. summarize publiclyavailable information about bankruptcy. The sample period for this study is from 2009 to 2015. From the KSE listed financial firms, a total of 40 firms were selected and accounting ratios were extracted from balance sheet analysis reports published by State bank of Pakistan. The empirical results concluded that the logit model has a high rate of classification as compared to multiple discriminant analysis. The model has obtained overall 85.5% accuracy and identified three significant accounting ratios that are: retained earnings to total asset, earnings before income and taxes to the total asset, and current liabilities to total asset. The finding of this study would benefit stakeholders that are affected by bankruptcies. So in order to take an advantage, it is important to understand the phenomenon that causes bankruptcies.</p>

scholarly journals ANALISIS FINANCIAL DISTRESS DENGAN MENGGUNAKAN METODE ALTMAN Z-SCORE PADA PERUSAHAAN PT. UNITEX, TBK YANG TERDAFTAR DI BURSA EFEK INDONESIA

2018 ◽  
Vol 3 (2) ◽  
Author(s):  
Mei Kartini Sihombing ◽  
Pinondang Nainggolan ◽  
Parman Tarigan ◽  
Supitriyani Supitriyani
Keyword(s):  
Financial Distress ◽  
Total Asset ◽  
Z Score ◽  
Working Capital ◽  
Retained Earnings

Tujuan penelitian ini adalah untuk mengetahui gambaran FinancialDistress PT UNITEX, Tbk yang Terdaftar di Bursa Efek Indonesia pada tahun 2006-2014 berdasarkan metode Altman Z-score serta mengetahui faktor dominan yang menyebabkan Financial Distress PT. UNITEX, Tbk yang Terdaftar di Bursa Efek Indonesia pada tahun 2006-2014 dengan menggunakan Metode Altman Z-score. Metode yang digunakan dalam penelitian ini adalah metode analisis deskriptif dan induktif. Pengujian dilakukan dengan menggunakan bantuan program MS Excel dengan rasio Altman Z Score. Hasil penelitian dapat disimpulkan sebagai berikut : 1) Rata-rata Z Score selama tahun 2006 hingga tahun 2014 berada pada angka minus 2,79 atau berada di bawah angka 1,88. Ini berarti PT. Unitex, Tbk benar-benar dalam posisi sedang mengalami financial distress atau masalah keuangan yang serius. 2) Faktor-faktor Retained Earnings to Total Assets Ratio, Net Working Capital to Total Asset Ratio, dan Earnings Before Interest and Taxes to Total Asset Ratio adalah secara berurutan merupakan faktor-faktor yang paling dominan menyebabkan terjadinya financial distress pada PT. Unitex, Tbk. Hasil ini menerimahipotesis penelitian ini yang menyatakan bahwa “Diduga Retained Earnings to Total Assets Ratio, Net Working Capital to Total Asset Ratio, dan Earnings Before Interest and Taxes to Total Asset Ratio merupakan faktor yang dominan menyebabkan terjadinya Financial Distress PT UNITEX, Tbk yang Terdaftar di Bursa Efek Indonesia”.

scholarly journals ANALISIS FINANCIAL DISTRESS DENGAN MENGGUNAKAN BANKRUPTCY PREDICTION MODELS PADA EMITEN ROKOK PERIODE 2014-2018

2021 ◽  
Vol 4 (1) ◽  
pp. 16-27
Author(s):  
Ani Wahyuningsih ◽  
Hartono Hartono ◽  
Rini Armin
Keyword(s):  
Early Warning ◽  
Financial Distress ◽  
Prediction Models ◽  
Stock Exchange ◽  
Financial Statements ◽  
Bankruptcy Prediction ◽  
Correct Prediction ◽  
Financial Health ◽  
Z Score ◽  
Financial Difficulties

ABSTRACT Financial Distress is a condition of financial difficulties where if this happens to the company foa along period of time, the company is in the initial stages before bankruptcy. Bankruptcy is a state of being or a situation in which company failed to or not able to meet obligations because firm experienced lack of. If the company goes bankrupt there will be many parties who are harmed. Therefore it is necessary to conduct financial distress analysis for early warning. The research aims to determine the financial health of the cigarette sub-sector companies by analyzing financial distress using three bankruptcy prediction models with Altman Z-Score, Springate, Grover and to determine which of these three models has the highest level of accuracy. The data used in this research is the company’s financial statements published on the Indonesia Stock Exchange website. The population in this research is the cigarette sub-sector companies listed on the Indonesia Stock Exchange in the 2014-2018 period. Based on the result of research shows that in the calculation Altman and Springate models, PT. Bentoel International Investama in the category of the company experiencing symptoms of bankruptcy. While in the Grover model calculation, all companies fall into category healthy companies. Of the three models that have the highest level of accuracy are Altman and Springate models by one hundred percent. This shows that Altman and Springate models have the correct prediction of the company correctly.

Rasio-Rasio Keuangan dalam Memprediksi Kecurangan

2018 ◽  
Vol 10 (1) ◽  
pp. 66-76
Author(s):  
Alfian Ronggo Pribadi
Keyword(s):  
T Test ◽  
Total Asset ◽  
Z Score ◽  
Working Capital ◽  
Net Profit ◽  
Current Asset ◽  
Equity Ratio

Penlitian ini bertujuan untuk membuktikan apakah perusahaan yang melakukan kecurangan akuntansi dengan yang tidak melakukan kecurangan akuntansi memiliki nilai rasio yang berbeda secara signifikan dengan menggunakan dua model pendeteksi kecurangan akuntansi  yaitu Beneish M-Score da Altman Z-Score. Penelitian ini menggunakan delapan variabel yaitu debt to equity ratio , debt to total asset ratio, net profit to revenue ratio, current asset to total asset ratio, receivable to revenue ratio, inventory to total asset ratio,working capital to total asset ratio dan revenue to total asset ratio. Populasi dari penelitian ini adalah perusahaan manufaktur yang terdaftar di Bursa Efek Indonesia periode 2010-2016. Total sampel dalam penelitian ini sebanyak 57 perusahaan  dengan jumlah observasi sebanyak 212. Pengujian hipotesis dengan menggunakan uji beda independent sample t-test. Hasil penelitian ini menunjukkan bahwa variabel  debt to equity ratio , debt to total asset ratio, net profit to revenue ratio, working capital to total asset ratio dan revenue to total asset ratio memiliki perbedaan yang signifikan antara perusahaan yang melakukan kecurangan akuntansi dengan yang tidak melakukan kecurangan akuntansi. Sedangkan untuk variabel current asset to total asset ratio, receivable to revenue ratio , dan inventory to total asset ratio tidak memiliki perbedaan yang signifikan antara perusahaan yang melakukan kecurangan akuntansi dengan yang tidak melakukan kecurangan akuntansi.  

scholarly journals Family Businesses in Global Economy and Evaluating their Financial Health Using Bankruptcy Models

2021 ◽  
Vol 129 ◽  
pp. 03031
Author(s):  
Maria Truchlikova
Keyword(s):  
Financial Distress ◽  
Global Economy ◽  
Agricultural Sector ◽  
Prediction Models ◽  
Predictive Accuracy ◽  
Value Added ◽  
Business Environment ◽  
Bankruptcy Prediction ◽  
Family Businesses ◽  
Financial Health

Research background: Predicting and assessing financial health should be one of the most important activities for each business especially in context of turbulent business environment and global economy. The financial sustainability of family businesses has a direct and significant influence on the development and growth of the economy because they still represent the backbone of the economy and play an important role in national economies worldwide accounting. Purpose of the article: We used in this article the financial distress and bankruptcy prediction models for assessing financial status of family businesses in agricultural sector. The aim of the paper is to compare models developed by using three different methods to identify a model with the highest predictive accuracy of financial distress and assess financial health. Methods: The data was obtained from Finstat database. For assessing the financial health of selected family businesses bankruptcy models were used: Chrastinova’s CH-Index, Gurcik’s G-Index (defined for Slovak agricultural enterprises) and Altman Z-score. Findings & Value added: This article summarizes existing models and compares results of assessing financial health of family businesses using three different models.

scholarly journals Financial Compass for Slovak Enterprises: Modeling Economic Stability of Agricultural Entities

2020 ◽  
Vol 13 (5) ◽  
pp. 92
Author(s):  
Katarina Valaskova ◽  
Pavol Durana ◽  
Peter Adamko ◽  
Jaroslav Jaros
Keyword(s):  
Prediction Models ◽  
Predictive Accuracy ◽  
Characteristic Curve ◽  
Confusion Matrix ◽  
Predictive Ability ◽  
Early Warning Systems ◽  
Emerging Countries ◽  
Bankruptcy Prediction ◽  
Financial Health ◽  
Prediction Ability

The risk of corporate financial distress negatively affects the operation of the enterprise itself and can change the financial performance of all other partners that come into close or wider contact. To identify these risks, business entities use early warning systems, prediction models, which help identify the level of corporate financial health. Despite the fact that the relevant financial analyses and financial health predictions are crucial to mitigate or eliminate the potential risks of bankruptcy, the modeling of financial health in emerging countries is mostly based on models which were developed in different economic sectors and countries. However, several prediction models have been introduced in emerging countries (also in Slovakia) in the last few years. Thus, the main purpose of the paper is to verify the predictive ability of the bankruptcy models formed in conditions of the Slovak economy in the sector of agriculture. To compare their predictive accuracy the confusion matrix (cross tables) and the receiver operating characteristic curve are used, which allow more detailed analysis than the mere proportion of correct classifications (predictive accuracy). The results indicate that the models developed in the specific economic sector highly outperform the prediction ability of other models either developed in the same country or abroad, usage of which is then questionable considering the issue of prediction accuracy. The research findings confirm that the highest predictive ability of the bankruptcy prediction models is achieved provided that they are used in the same economic conditions and industrial sector in which they were primarily developed.

scholarly journals Bankruptcy prediction in Visegrad group countries using multiple discriminant analysis

Equilibrium ◽  
2018 ◽  
Vol 13 (3) ◽  
pp. 569-593 ◽  
Author(s):  
Tomas Kliestik ◽  
Jaromir Vrbka ◽  
Zuzana Rowland
Keyword(s):  
Discriminant Analysis ◽  
Prediction Models ◽  
Value Added ◽  
Bankruptcy Prediction ◽  
Net Income ◽  
Multiple Discriminant Analysis ◽  
Financial Situation ◽  
The Future ◽  
A Company ◽  
Visegrad Group

Research background: The problem of bankruptcy prediction models has been a current issue for decades, especially in the era of strong competition in markets and a constantly growing number of crises. If a company wants to prosper and compete successfully in a market environment, it should carry out a regular financial analysis of its activities, evaluate successes and failures, and use the results to make strategic decisions about the future development of the business. Purpose of the article: The main aim of the paper is to develop a model to reveal the un-healthy development of the enterprises in V4 countries, which is done by the multiple discriminant analysis. Methods: To conduct the research, we use the Amadeus database providing necessary financial and statistical data of almost 450,000 enterprises, covering the year 2015 and 2016, operating in the countries of the Visegrad group. Realizing the multiple discriminant analysis, the most significant predictor and the best discriminants of the corporate prosperity are identified, as well as the prediction models for both individual V4 countries and complex Visegrad model. Findings & Value added: The results of the research reveal that the prediction models use the combination of same financial ratios to predict the future financial development of a company. However, the most significant predictors are current assets to current liabilities ratio, net income to total assets ratio, ratio of non-current liabilities and current liabilities to total assets, cash and cash equivalents to total assets ratio and return of equity. All developed models have more than 80 % classification ability, which indicates that models are formed in accordance with the economic and financial situation of the V4 countries. The research results are important for companies themselves, but also for their business partners, suppliers and creditors to eliminate financial and other corporate risks related to the un-healthy or unfavorable financial situation of the company.

scholarly journals ANALISIS PREDIKSI KEPAILITAN PADA BANK UMUM SWASTA NASIONAL DEVISA YANG TERDAFTAR DI BURSA EFEK INDONESIA TAHUN 2010 – 2013

2018 ◽  
Vol 4 (1) ◽  
pp. 93
Author(s):  
Sumaniyatun Fadhilah ◽  
Indah Kurniawati
Keyword(s):  
Commercial Bank ◽  
Foreign Exchange ◽  
Stock Exchange ◽  
Bankruptcy Prediction ◽  
Z Score ◽  
Working Capital ◽  
Purposive Sampling ◽  
Gray Area ◽  
Private Banks

The purpose of this study is to assess bankruptcy prediction in the National Private Banks Foreign Exchange listed in Indonesian Stock Exchange. This study uses the size of liquidity ratio of working capital to total assets. This study uses the find were the purposive sampling. The population in this study is the National Private Commercial Bank Foreign Exchange listed on the Indonesian Stock Exchange during the period of the study, namely between 2010 until 2013. The sample amounted to 21 banks during the 4 years that have been selected based on specific criteria. Based on the results of the analysis carried out stating that the National Private Commercial Bank Foreign Exchange listed in Indonesian Stock Exchange in 2010 there were 29 % of banks that are insolvent, 71 % of banks that are in the gray area, and no banks that are in not bankruptcy predictions. In 2011 29 % of banks that are insolvent, 67 % of banks that are in the gray area and 5 % are located on the banks not bankruptcy prediction. In 2012 29 % of banks that are insolvent, 67 % of banks that are in the gray area, and 5 % of banks that are in the prediction of the bank is not bankrup. In 2013 29 % of banks that are in bankruptcy prediction, 71 % of banks that are in the gray area, and there are no banks that are in not bankruptcy predictions. There is no difference in Z-score on bankruptcy prediction National Private Banks Foreign Exchange Listed in Indonesian Stock Exchange between 2010, 2011, 2012, and 2013.

scholarly journals Family businesses and predictability of financial strength: a Hungarian study

2020 ◽  
Vol 18 (2) ◽  
pp. 476-489 ◽  
Author(s):  
Judit Sági ◽  
Nick Chandler ◽  
Csaba Lentner
Keyword(s):  
Prediction Models ◽  
Cash Flows ◽  
Bankruptcy Prediction ◽  
Family Businesses ◽  
Added Value ◽  
Test Results ◽  
Financial Health ◽  
Financial Strength ◽  
Management Perspective ◽  
Practical Implications

The aim of this study is to examine how bankruptcy prediction models forecast financial strength for family businesses. Three predictive tests are used to study financial strength for three consecutive years (2016, 2017 and 2018) for a sample of 462,200 active Hungarian companies using the Amadeus database and expert data. Complex statistical model tests for credit assessment (bankruptcy predictions) are performed by size and ownership of the companies. It is found that the revised Altman model is impeded by a superfluous high weighting on net working capital; therefore, IN05 Quick Test predicted better chances for businesses in generating cash flows in a small emerging economy. By re-formulating the Bankruptcy Index of Karas and Režňáková and refining its coefficients, the modified Bankruptcy Index is more robust for predicting the financial health of family businesses on a cash flow basis. The test results of this modified Bankruptcy Index confirm the relative advance of family businesses in creating added value for owners. Practical implications arise from a management perspective: family businesses work better with predictability of survival in accordance with the model; therefore, their ability to adapt to financial constraints caused by crises is also more promising.

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