Using Altman Z-Score Model in Comparing Firms’ Financial Performance Applied Research on Egyptian Stock Market
DOI:
https://doi.org/10.56830/WRBA11202105Keywords:
Altman Z-score, Financial Distress, Prediction Models, Egyptian Stock MarketsAbstract
Financial performance has been of concern to management and other stakeholders since the 2008 financial crisis. The impact of financial distress and bankruptcy on firms cannot be taken for granted. Financial distress is detrimental to big organizations and the small organizations alike. This study was conducted with the purpose testing if Altman’s failure prediction model is good indicator in predicting financial distress of firm working in Egyptian stock market. The study took a sample of seven companies from firms working in Egyptian stock market during the period from 2016 to 2020. Data was extracted from secondary sources for a period of five years. Data extracted included working capital, total assets, retained earnings, market capitalization total liabilities and sales. The collected data was then analyzed using Microsoft excel software. The study established that the Altman’s Z-score model was good indicator for predicting financial distress of firm working in Egyptian stock market. The study recommends the adoption of Altman’s failure prediction model in predicting financial distress of firm working in Egyptian stock market by not only investors but also all other stakeholders.
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