PREDICTING CORPORATE FINANCIAL DISTRESS USING ALTMAN’S Z-SCORE MODEL – A STUDYOF SELECTED PUBLICLY TRADED TEXTILE COMPANIES OF BANGLADESH

  • Bidhan Chandra Mazumder Professor of Accounting, University of Chittagong, Chittagong - 4331, Bangladesh
  • Khadiza Akter MBA Graduate, Department of Accounting, University of Chittagong,
Keywords: Financial distress prediction, publicly traded textile companies, Bangladesh, Altman Z-score

Abstract

The aim of thisstudy isto predict the financial distress of the listed textile companies of Bangladesh using Altman’s Z-score model. The data for 5 recent years from 2016-17 to 2020-21,covering the COVID-19 aggression period 2019-20 to 2020-21, have been collected from 5samples which were chosen purposively from the textile companies listed in both Dhaka Stock Exchange and Chittagong Stock Exchange Ltd. The study reveals that although most of the samples had a turned around tendency in their financial performance measured by Z-score during the COVID-19 aggression period, some poor financial ratios caused two-fifth of the samples to fall in distress zone and the remaining samples in gray zone during the study period. In this context, the study assumes that in addition to covering various key issues in a strategic plan, the samples should consider other issues like cost-cutting, optimizing operational efficiency and the like that can help manage cash flows and keep the business a-going and avoid the risk of financial distress. Eventually, both the current and potential investors are assumed to have some insights from this study as to the financial health of relatively older listed textile companies of Bangladesh and also to easily adopt the technique used in this study to predict thefinancial health of the companies under the textile industry of Bangladesh. The study also assumes that it might create scope to further research for exploring the cause(s) behind its results.

Published
2024-04-26
Issue
Vol 55 No 2 (2023)
Section
Articles

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