Evaluation of the revised Z'-score model as a predictor of a company's financial failure

E. Kozarević, Dženita Pirić
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Abstract

Under contemporary business conditions, there are numerous models used for the assessment of a company's financial situation and the prediction of the likelihood of its bankruptcy. These models have been mainly developed using the company's financial information. One of them is the Altman Z-score model. The model separates financially successful and stable companies from those having difficulties in business and headed for bankruptcy. This paper explains the importance of prudential information, basic financial statements and financial indicators and presents the research aimed at evaluating the applicability of the revised Altman Z'-score model in the Federation of Bosnia and Herzegovina (FBiH). Based on financial information, the paper analyzes the business activities of 50 large manufacturing companies in FBiH. The revised Z'-score model achieved a relatively good result in assessing the companies with business difficulties as it correctly classified 10 out of 20 companies; the other 10 companies were not incorrectly classified into the companies with the stable business but they were placed in the grey zone. The model proved completely reliable in the classification of all 30 companies with stable businesses. The research results indicate that the revised Altman Z'-score may be used as the predictor of the financial failure of manufacturing companies in FBiH. This model is definitely the tool that may assist while making business decisions. However, due to the specific business environment in FBiH, the model is recommended to be used as an additional rather than the basic indicator for predicting financial failure.
评估修订后的Z'-score模型作为公司财务失败的预测因子
在当代商业条件下,有许多模型用于评估公司的财务状况和预测其破产的可能性。这些模型主要是利用公司的财务信息开发的。其中之一是Altman z分数模型。该模型将财务上成功和稳定的公司与经营困难和濒临破产的公司区分开来。本文解释了审慎信息、基本财务报表和财务指标的重要性,并介绍了旨在评估修订的Altman Z'-score模型在波斯尼亚和黑塞哥维那联邦(FBiH)适用性的研究。本文以财务信息为基础,分析了波黑50家大型制造业企业的经营活动。修正后的Z -score模型在20家企业中,对10家企业进行了正确的分类,取得了较好的评价结果;另外10家企业虽然没有被错误地归类为“稳定企业”,但却被归类为“灰色地带”。在对所有30家业务稳定的公司进行分类时,该模型被证明是完全可靠的。研究结果表明,修正后的Altman Z -score可以作为波黑制造业企业财务失败的预测因子。这个模型绝对是在制定业务决策时提供帮助的工具。然而,由于波黑的特定商业环境,建议将该模型作为预测财务失败的附加指标,而不是基本指标。
本文章由计算机程序翻译,如有差异,请以英文原文为准。
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