Financial Ratios as Predictors of Failure
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Date
2019
Journal Title
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Other
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Copyright © 2019 MSA University. All Rights Reserved.
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MANAGEMENT DISTINGUISHED PROJECTS 2019;
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Abstract
In light of recent events that have taken place, the importance of knowing the financial position of banks is imperative to stakeholders. There is a major dearth of literature that examines the applicability of Altman’s Z-score model to forecasting banking failures. The focus of this study is to confirm the validity of Altman’s Z-score model as a predictor of failures. This requires two data sets: failed and non-failed banks. Four distressed banks were benchmarked to four comparable control banks. Ratio analysis was carried out on the failed company’s financial statements for three years prior to their bankruptcy or nationalization as the Z-score model has predictive power of up to three years pre-bankruptcy. The empirical findings verified the predictive ability of the Z-score model to the company’s area.
Description
Keywords
October University for Modern Sciences and Arts, University of Modern Sciences and Arts, MSA University, جامعة أكتوبر للعلوم الحديثة والآداب, Financial Ratios
Citation
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