scholarly journals Predicting the Risk of Insolvency in Small Enterprises: Critical Analysis of the Predictive Model Associated with the New Italian Code of Business Crisis

2021 ◽  
Vol 16 (7) ◽  
pp. 41
Author(s):  
Anna Maria Arcari ◽  
Daniele Grechi
Keyword(s):  
Predictive Model ◽  
Critical Analysis ◽  
Control Sample ◽  
Small Enterprises ◽  
Z Score ◽  
Balance Sheets ◽  
New Business ◽  
Score Model ◽  
Business Crisis

Numerous studies have been conducted to verify whether, and under what conditions, Altman's Z-Score model can also be applied to unlisted, non-US companies. The response of numerous studies confirms the substantial validity of this algorithm. However, in Italy, the legislator, in launching the new Business Crisis Code in 2019, in adherence to an important European recommendation, did not adopt the aforementioned model but approved a different one. In order to find a justification for this choice, the present work intends to test the effectiveness of the warning indices that will be adopted in Italy by comparing them with the Altman predictive model in the Z'' Score version. To this end, the two models were applied to the balance sheets of 789 Italian firms that went bankrupt in the period 2016-2018 and, at the same time, to a control sample, equal in number and composition, of non-bankrupt firms. The results of this analysis produced two distinct findings. The Italian method proved to be less effective in predicting a crisis than the Z'' score. but more effective in determining whether a firm is truly healthy. This evidence is useful to confirm once again the effectiveness of the Z'' Score in a non-American context but also, and above all, to provide suggestions to the Italian legislator so that it can refine the predictive model currently in force.

scholarly journals Is it Worth Comparing Different Bankruptcy Models?

2015 ◽  
Vol 63 (2) ◽  
pp. 525-531 ◽  
Author(s):  
Miroslava Dolejšová
Keyword(s):  
Financial Performance ◽  
Financial Statements ◽  
T Test ◽  
Small Enterprises ◽  
Z Score ◽  
Statistical Data Analysis ◽  
Financial Condition ◽  
Score Model ◽  
The One ◽  
Paired T Test

The aim of this paper is to compare the performance of small enterprises in the Zlín and Olomouc Regions. These enterprises were assessed using the Altman Z-Score model, the IN05 model, the Zmijewski model and the Springate model. The batch selected for this analysis included 16 enterprises from the Zlín Region and 16 enterprises from the Olomouc Region. Financial statements subjected to the analysis are from 2006 and 2010. The statistical data analysis was performed using the one-sample z-test for proportions and the paired t-test. The outcomes of the evaluation run using the Altman Z-Score model, the IN05 model and the Springate model revealed the enterprises to be financially sound, but the Zmijewski model identified them as being insolvent. The one-sample z-test for proportions confirmed that at least 80% of these enterprises show a sound financial condition. A comparison of all models has emphasized the substantial difference produced by the Zmijewski model. The paired t-test showed that the financial performance of small enterprises had remained the same during the years involved. It is recommended that small enterprises assess their financial performance using two different bankruptcy models. They may wish to combine the Zmijewski model with any bankruptcy model (the Altman Z-Score model, the IN05 model or the Springate model) to ensure a proper method of analysis.

scholarly journals The effectiveness of the Spanish banking reform application of Altman’s Z-Score

2016 ◽  
Vol 6 (4) ◽  
pp. 40-47
Author(s):  
Lious Agbor Tabot Ntoung ◽  
Felix Puime Guillén ◽  
Miguel Ángel Crespo Cibrá
Keyword(s):  
Predictive Power ◽  
Ratio Analysis ◽  
Z Score ◽  
Recent Event ◽  
Banking Reform ◽  
Balance Sheets ◽  
Financial Position ◽  
Before And After ◽  
Recent Financial Crisis ◽  
Score Model

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.

scholarly journals The use of Z-Score to predict UTP loans

2020 ◽  
Vol 18 (1) ◽  
pp. 163-178
Author(s):  
Maurizio Dallocchio ◽  
Salvatore Ferri ◽  
Alberto Tron ◽  
Matteo Vizzaccaro
Keyword(s):  
Corporate Governance ◽  
Predictive Model ◽  
Logit Model ◽  
Z Score ◽  
Score Model

The Z-Score model developed by Altman in 1968 is considered one of the more reliable predictors of bankruptcy. In contraposition to the existing literature, the paper aims to investigate the Z’-Score and Z’’-Score ability to predict unlike-to-pay (UTP) loans, which is an event far earlier than insolvency. To investigate this relation, the study uses a unique sample of UTP loans, provided by a major Italian bank, and applies, as a predictive model, the Logit model, well known in academics. Final results confirm that the Z’-Score and the Z’’-Score are able to forecast UTP loans. Furthermore, the findings of the papers reveal the importance of corporate governance variables in predicting financial failures.

scholarly journals Validity of Altman Z-Score Model to Predict Financial Failure: Evidence From Jordan

2018 ◽  
Vol 10 (8) ◽  
pp. 181 ◽  
Author(s):  
Sufian Al-Manaseer ◽  
Suleiman Al-Oshaibat
Keyword(s):  
Stock Exchange ◽  
Financial Statement ◽  
Insurance Companies ◽  
Z Score ◽  
Financial Reports ◽  
Financial Failure ◽  
Amman Stock Exchange ◽  
The Face ◽  
The Subject ◽  
Score Model

This paper aims to investigate the Validity of Altman z-score model to predict financial failure in insurance companies listed on Amman Stock Exchange (ASE) over the period 2011-2016. To achieve the goal of the study, the study depended on the different statistics analytical method and Multiple Linear Regression through doing the statistical analysis of the independent variables on the dependent variable related to the subject of the study through the (E-views) program in order to cover the analytical part of the study, in addition to the descriptive method through relying on books, periodicals, previous studies and financial reports of the insurance companies of the study’ sample, whether the direct or the indirect ones, to cover the theoretical part. The result of the study finds a high predictive power for Z-score model. Moreover, the findings reveal that Z-Score model could be valuable instrumental indicators for many users of financial statement such as financial managers, auditors, lenders, investors, to make right decisions in the face of financial failure.

scholarly journals TESTING BHANDARI Z-SCORE MODEL BANKRUPTCY PREDICTION USING CASH FLOW

2018 ◽  
Vol 2 (1) ◽  
pp. 121-128
Author(s):  
Barcha Handal Sakti ◽  
Ely Kartikaningdyah
Keyword(s):  
Cash Flow ◽  
Stock Exchange ◽  
Predictor Variable ◽  
Bankruptcy Prediction ◽  
Z Score ◽  
Discriminating Power ◽  
Significant Difference ◽  
Operating Cash Flow ◽  
Score Model

This research aimed to know whether the predictor variables on Bhandari’s z-score model having discriminating power which in each of the group has significant difference. Sample which was being used to assist was the manufacture company that consisted of healthy company and the unhealthy company enrolled in Indonesia stock exchange in the period of 2012-2014. Sample collecting method used purposive sampling and cross section was the data used in this research. This research was conducted by using Multivariat Discriminant Analysis (MDA). The result of this study showed predictor variable that gave discriminating power which stood of quality of earning (EAQ), operating cash flow divided by current liabilities (OCFCL), operating cash flow margin (OCFM), and operating cash flow return on total assets (OCFA) in distinguishing the healthy and unhealthy company significantly.

scholarly journals Analysis of bankruptcy issues at manufacturing companies, sub-sectors of cosmetics and houseappliances registered in Indonesia Stock Exchange (IDX) year 2015-2017 using Altman Z-score

2019 ◽  
Vol 4 (01) ◽  
pp. 27
Author(s):  
Indar Khaerunnisa ◽  
Nur Anisa Rahayu
Keyword(s):  
Financial Performance ◽  
Financial Distress ◽  
Stock Exchange ◽  
Manufacturing Companies ◽  
Z Score ◽  
Marketing Performance ◽  
Grey Area ◽  
Manufacturing Company ◽  
Score Model

This research aims to figure out the level of companies bankruptcy by applying Altman Z-Score at the manufacturing companies registered in the Indonesia Stocks Exchange. The result of the research has indicated that ZScore model is applicable to detect the company’s potential bankruptcy issues, especially manufacturing company subsectors of cosmetics and houseappliances. Altman Z-Score model has classified the companies into three categories; safe, grey area and distress. Based on the result of the research, for the companies which are in the grey area category are suggested to improve their financial performance and to use the benefit of all the assets properly to get the revenue as much as possible. However, for the companies which are in the safe category are suggested to increase their performance, especially marketing performance so that they will receive bigger amount of the revenue, nevertheless, the potential of financial distress can be minimized accordingly. Keywords: manufacturing company, financial distress, Altman Z-Score.

scholarly journals A STUDY ON FINANCIAL HEALTH OF SELECTED PUBLIC SECTOR MANUFACTURING COMPANIES OF INDIA : WITH REFERENCE TO Z-SCORE ANALYSIS

2021 ◽  
Vol 9 (08) ◽  
pp. 857-865
Author(s):  
Nidhi Sharma ◽  
◽  
Shivani Peppal ◽  
Keyword(s):  
Public Sector ◽  
Grey Zone ◽  
Manufacturing Companies ◽  
Financial Health ◽  
Z Score ◽  
Common Condition ◽  
Score Analysis ◽  
Score Model

Financial distressed from a decade has become a common condition for manufacturing companies of India. Many public sector manufacturing companies have also witnessing poor financial health. This study has examined the financial health of eighteen selected public sector manufacturing companies which are further divided into four sectors as Metal, Sugar, Paper and Textile. The examination of financial health of selected companies has been performed by calculating Altman Z-score model for four year prior to become distressed. And it has been found by the analysis that most of the company was in either distressed zone or in grey zone. The study also finds that Altman Z-Score Model is a perfect tool to examine the health of public sector manufacturing companies.

scholarly journals Insolvency Risk. Application of Altman Z-score to the auto parts sector in Romania

2021 ◽  
Vol 7 (4) ◽  
pp. 37-48
Author(s):  
Rodica Baciu ◽  
Brezeanu Petre ◽  
Adrian Simon
Keyword(s):  
Interest Rates ◽  
Motor Vehicle ◽  
Stress Test ◽  
Future Research ◽  
Z Score ◽  
Working Capital ◽  
Insolvency Risk ◽  
Medium Risk ◽  
Capitalization Rate ◽  
Score Model

This paper intends to apply the Altman Z-score model to all the companies active in the wholesale of motor vehicle parts and accessories (NACE 4531), with extended financial statements. Using the panel data model over the time series for 2008-2016 on the companies of this sector, we conclude that 99% of the Z-score is explained by the independent variables (working capital, capital structure, turnover, earnings before interest and tax), with estimated parameters very close to the models classical values. The sample description of the paper and the corresponding results highlights the Z-score evolution by turnover clusters and principal components, with the largest companies performing the best (the only cluster with Z-score median above 3). We notice a tendency for decreasing high risk companies and increase in the medium risk companies, whereas the low risk companies are relatively stable. This improvement is mostly due to increasing capitalization rate and less external debt, despite the deteriorating working capital and operating margin. We believe that future research to evaluate Z-score sensitivity under stress test scenarios would be very useful to provide an insight of companies’ insolvency risk amid increasing interest rates and different fiscal tax on dividend.

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