Financial Distress Conditions of Commercial Banks in Ethiopia: An Application of Altman's Z-Score 1993 Model.

Abstract

In order to achieve the main objective of this study ‘Financial Distress Conditions of Commercial Banks in Ethiopia: An application of Altman’s Z-score 1993 model.’ The model needs a minimum of five years financial statement to predict their existing financial distress conditions. Thus the researcher collected these financial statements from official website of 14 (fourteen) private commercial banks and National Bank of Ethiopia data source. The collected quantitative data are codded and arranged on excel to make suitable for the selected Z-score; and then finally analyzed and interpreted using descriptive analysis. The finding of the study shows that; on average the selected private commercial banks are categorized under ‘Gray Zone’; since the average Z-Score is 1.47; which is in between 1.1 and 2.6 cut-off point of (Altmans’, 1993) Z-score. Suggesting banks to take different remedies for their current condition, applying different predictive models to evaluate their current conditions and forecast future financial activities and future research directions are given as recommendation.