This website uses cookies to ensure you have the best experience. Learn more

Financial Distress Prediction Using Z Score Essay

5279 words - 22 pages

IntroductionAccording to Pate (2002), 257 public companies, with total assets of $256 billion, filed for bankruptcy in 2001. That this is the highest number of bankruptcy filings since 1980 is alarming. Furthermore, it is uncomfortably large compared to the number of filings during the last recession (125 filings in 1991 and 91 filings in 1992). Pate further estimates the likely number of public company bankruptcy filings in 2002 will be about 200, 22 percent below the 2001 level, but still well above the 1986-2000 average of 113. Another clearly visible trend is the increase in the number of large companies going bankrupt. Altman (2000) points out that bankruptcy in firms with large asset ...view middle of the document...

Dealing with insolvent estates for legal procedures dates back to ancient Roman law. The principles of insolvency got extensive codification during the middle ages, and then the study of insolvency prediction evolved. Smith and Winakor did the first study in 1935, during the Great Depression era, then in 1942, Merwin showed that failing firms exhibit significantly different ratios than do successful firms (Sung et al., 1999:65).The social and economic costs associated with insolvency need a law to govern the whole process. The South African Law Commission (2000:10) referring to the Legal Department of International Monetary Fund, stated that the overall objective of insolvency laws are (1) the allocation of risk among participants in a market economy in a predictable, equitable, and transparent manner; and (2) to protect and maximize value for the benefit of all interested parties and the economy in general (chapter 2 of the document which is available on-line at: www.imf.org/external/pubs/ft/orderly/index.html).In the case of forced bankruptcy, which is initiated by creditors, the process require the involvement of the civil authorities in the settlement of the credits. Schwartz (1996:26) summarizes that bankruptcy law enables the right of the creditors to collect, guarantee ratable distribution of asset value among creditors according to contractual priorities, and provide debt restructuring possibilities.In South Africa the term insolvency is used rather than bankruptcy. Insolvency is company failure with firms undergoing a formal liquidation procedure upon classification as failed (Truter, 1996:2). The Insolvency Act 24 of 1936 of South Africa is the replacement of the Insolvency Act 32 of 1916. During 1996 a draft insolvency Bill and Explanatory Memorandum was published as Discussion Paper 66, and in 1999 a further draft Insolvency Bill and Explanatory Memorandum was published as Discussion Paper 66 and 86 (South African Law Commission, 2000:9). These amendments were important in the modernization of the law of insolvency.Recent history of bankruptcyThere is an increased attention in bankruptcy and other forms of business failure in recent years. It is continued to be a topic of interest to researchers from the field of accounting, economics, and finance. The substantial increase in business failures recently, and the resultant losses for creditors, has promoted a renewed interest in exploring all possible means by which business failures can be predicted in their early stages, thus permitting quick remedial action in an effort to minimize loan losses (Doukas, 1986:479). The increase in the size of liabilities of failed firms and the proportion of large firms that file for bankruptcy has been even more marked. According to Chuvakhin & Gertmenian (available on-line at http://abr.pepperdine.edu/031/bankruptcy) the size of the companies going bankrupt has been a distinct trend of filing for bankruptcy over the past several years. As...

Other Essays On Financial Distress Prediction Using Z-Score

Statistics Study Guide Math 115 - Math 115 - Study Guide

3415 words - 14 pages MATH 115 CH1-CH4 REVIEW SPRING 2018 Name___________________________________ Provide an appropriate response. 1) Define random sample. Explain why this is important in design of experiments. 1) 2) Define the terms population, sample, parameter and statistic. How does a census compare to a sample? Define discrete and countinuos data. Define sample stantard deviation and z-score. 2) Form a conclusion about statistical significance. Do not

annotated bib just so i can read something - mlis 60040 - annotated bibliography

1305 words - 6 pages have a positive experience, but we need to ensure they do so their positive experience is told to others and the library continues to grow. This will ensure positive results from employees because they will have job security. Laitinen, M. A. (2018). Net promoter score as indicator of library customers perception. Journal of Library Administration,58(4), 394-406. doi:10.1080/01930826.2018.1448655 This study concentrates on the idea of using Net

Affect of Climate Change on the Giant Panda - Barry University - Research Paper

1330 words - 6 pages .12592 Zhang J, Hull V, Ouyang Z, et al. Modeling activity patterns of wildlife using time‐series analysis. Ecol Evol. 2017;7:2575–2584. https://doi.org/10.1002/ece3.2873 Zhen, J.; Wang, X.; Meng, Q.; Song, J.; Liao, Y.; Xiang, B.; Guo, H.; Liu, C.; Yang, R.; Luo, L. Fine-Scale Evaluation of Giant Panda Habitats and Countermeasures against the Future Impacts of Climate Change and Human Disturbance (2015–2050): A Case Study in Ya’an, China. Sustainability 2018, 10, 1081.

Yucatec Maya subsistence farmers - Anthropology first year course university of toronto - Article Review

1939 words - 8 pages Karmar 2017). There are two Z-scores used in the article; the population specific Z-score is used to compare intrapopulation and the WHO Z-score for cross-cultural reference. The WAZ scale was used for infant calculations of underweight, overweight and obese and the BMI criteria was used for adults to calculate the same categories (Veile and Karmar 2017). It was also noted that the majority of the participants were a part of a government

SAT and ACT Argumentative Paper - ENG 150 - Argumentative Paper

1926 words - 8 pages -hundred-point difference in our scores. This situation fits the statistic perfectly as I, a white American of a high-income family, received a better score due to my abilities to afford preparation luxuries, while my cousin’s boyfriend, a minority group representative of a low economic status, had to make due with a lower score because of his inferior financial abilities lessening his available resources to prepare for the SAT. His lack of these

LGBT: An evolving health disparity - Nursing 704 - Health disparities - Health Disparity

3401 words - 14 pages in 2012 due the nature of being underserved. As age advances, a person suffers from greater health risks and disease processes. LGBT elderly have an even higher risk and present with poorer general health than either group alone (Emlet, 2016). This group is also associated with an increase in substance abuse, mental disorders, financial distress, and disability all contributing to poor health outcomes. Because many in this subgroup were raised

use of prisons and their correctional style - english 1101 - research paper

3915 words - 16 pages , collegiate swimmers. North Amer. J. Sports Physical Therapy 4(3):139–148 9.James, J.S., Rickard, B.J., Rossman, W.J.(2009) Product differentiation and market segmentation in applesauce: Using a choice experiment to assess the value of organic, local, and nutrition attributes. Agr. Resource Econ. Rev. 38(3):357–370. 10.Kim, H., House, L.A., Rampersaud, G., Gao, Z.(2012) Front-of-package nutritional labels and consumer beverage perceptions. Appl. Econ

Statistical Methods In Healthcare - Towson University/Econ 205 - Research Paper

2077 words - 9 pages new European Union member states, and Israel. There are also some restrictions to this study as well. Exploring potential effects of culture on healthcare is limited to the tools measuring the culture. Culture is a broad concept, using Hofstede indices as an attempt to “quantify” culture can also come with a great deal of criticism. Healthcare Disparities in Hispanic Diabetes Care: A Propensity Score-Matched Study Hispanics represent the largest

biopscyhosocial effect of exercise and social interaction on depression - Psychology 601 at York - essay

3649 words - 15 pages , it is an emotional need as well. When subjected to social isolation (or only experience social interaction that is a requirement for work), I experience psychological distress (Umberson and Montez, 2010). This was reflected in my research. The BDI measurement ranges from 0 to 63. My baseline began at a measurement of 29. Each day, my BDI score lowered until by the end of the trail period, my score was 20 which was a decrease of 31%! When I

History and Methods AP Psychology - essay - essay

1452 words - 6 pages relationship between two sets of scores, range between +1.00 and – 1.00, the closer to 1 the stronger the correlation Z-score –a way of expressing a score’s distance from the mean in terms of the standard deviation Empiricism the idea that what we know comes from experience, and that obervatiosn and experimentation enable scientifiic knowledge 1. Trephination 1. Stone Age humans carving holes through the skull to release evil spirits 2. Wilhelm

Physics guide that will help with chapter 1 - The colony/ physics - Review

1806 words - 8 pages : thinking that does not blindly accept arguments and conclusions. Rather, it examines assumptions, discerns hidden values, and evaluates evidence, and assesses conclusions. The Scientific Method: a self-correcting process for asking question sand observing nature’s answers. Theory: an explanation using an integrated set of principles that organizes observations and predicts behaviors or events. Hypothesis: a testable prediction, often implied by

Similar Papers

Corporate Finance Burberry And Mulberry Analysis De Montfort University Assignment

737 words - 3 pages potential problems, due to too many ratio to evaluate one company, it would make people confused to classification results. Financial ratio also be restrict on different industries and size such as Moody’s company (Beaver, 1966). Based on Beaver, Altman(1968) proposed Z score which has rigorous indicate to analysis whether a company have bankruptcy. Burberry, Mulberry has relatively safe score that is all above three, that is lower risk of

Effects Of Disease On Human Physiology; Skeletal System

421 words - 2 pages AppendicesNormal Healthy Bone: Bone Affected by OsteoporosisAppendix BAppendix AAppendix C T-Score below 0 T-Score = 0 T-Score above 0 Bones are less dense than the average younger population Bones are the same density as the average younger population Bones are denser than the average younger population Appendix D(Tables constructed using information available from Osteoporosis Australia website) Z-Score below 0 Z-Score = 0 Z

Homework Ielts Lasdflasjdflkajsdfl;Jasdf Yi9y8y98oyoy Iiuyiy7yoyo

625 words - 3 pages communication skill when they practice by using real life situation, dialogs and sentences on the practice course. Additionally, taking practice courses can help students have better career development. For instance, students can understand what are income and output when they take a financial education, which is of great value to their financial freedom. Comment by Alvin. Z.: …when they try to speak sentences and have conversations with others

Individual Differences In Personality Five Factor Model Murdoch University Essay

3026 words - 13 pages 1 INDIVIDUAL DIFFERENCES AND PERFORMANCE 1.1 Compared to my peers enrolled in this unit, some of my scores on the IPIP display marked disparities. Most significant is my Openness to Experience (Openness) score of 103, almost two standard deviations from the mean (M= 86.75, SD= 10.60), illustrating the statistical significance differentiating me from my peers. Only five individuals scored higher than myself in the total sample (N=145, Range= 53