WSEAS Transactions on Business and Economics
Print ISSN: 1109-9526, E-ISSN: 2224-2899
Volume 17, 2020
Financial Distress and Bankruptcy Prediction: an Empirical Analysis of the Manufacturing Industry in Albania
Authors: ,
Abstract: Bankruptcy is the conclusive affirmation of the inability of a company to support and endure current operations given its current financial position and debt obligations. If bankruptcy could be expected with affordable precision ahead of time, managers and investors of companies may have the possibility to take action to secure their companies, reduce risk and loss of business and perhaps even avoid bankruptcy itself. The aim of this paper is to test the suitability and predictive accuracy of the Altman Z-Score model in the Albanian manufacturing industry. After performing the empirical analysis, the conclusion is that this model clearly fails to effectively predict financial distress and bankruptcy and it isn’t reliable in our case. Lastly, a logistic regression model is proposed, which is more adequate for the Albanian context.
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Keywords: Bankruptcy, financial distress, crisis, manufacturing industry, Z-Score model, logistic regression
Pages: 33-40
DOI: 10.37394/23207.2020.17.5