Asian Journal of Research in Business Economics and Management
Year : 2012, Volume : 2, Issue : 7
First page : ( 102) Last page : ( 113)
Online ISSN : 2249-7307.

Capital structure and turnaround strategies using altman's Z-score models

Prof. (Dr) Bhatt Suyash N., Associate Professor

Finance, Prin. L. N. Welingkar Institute of Management Development and Research

Online published on 4 July, 2012.

Abstract

This study investigates the ability of three versions of Altman's Z-Score model of distress prediction developed in the U.S. to predict the corporate distress in the emerging market of India. The results show that these models have a remarkable degree of accuracy in predicting distress using financial ratios computed from financial statements in the year prior to distress. The overall success rate of 81% is observed using the Z”-Score. The out-of-sample evidence provided in this paper means that the Z-Score models seem to have a very good potential in evaluating the risk of corporate distress in smaller emerging markets as well.

Top