Many research works had been done by researchers around the world to analysis the corporate failure of the companies. Beaver (1966) was the first person who used financial ratios to predict corporate sickness. He used 30 financial ratios and selected 79 non-failed and 79 failed firms for his study and concluded that cash flow to total debts ratio is the best failure predictor. Edward I Altman (1968), a professor of New York University carried out research for predicting bankruptcy. He considered 33 failed and 33 non-failed companies as sample. He developed Z score model, which is based on âMultiple Discriminate Analysisâ (MDA), is use in the prediction of bankruptcy of a company. The result of his study showed that bankruptcy prediction could be correctly made with 95% success in the first year before the bankruptcy, it decreased to 72% in the second year, 48% in third year, 26% in fourth year and 19% in fifth year prior to bankruptcy. L.C. Gupta (1979), in Indian context, attempted to predict the corporate sickness, so he selected 41 textile companies (out of which 20 sick and 21 non-sick) and 39 non-textile companies (out of which 18 sick and 21 non-sick) as sample. He used financial ratios to evaluate the performance of the sample companies. Johah Aiyabei (2002) used Z score model to analyze the financial performance of small business concerns of Kenya and discussed the theoretical aspects of distressed firms. K. Chaitanya (2005) measured the financial performance of IDBI by Altman Z score and came to the conclusion that IDBI is not in healthy zone and likely to be insolvent in near future. M. Kannadhasan (2011) attempted to measured the financial health of Wendt (India) Limited by using Altman Z score model and concluded that the financial health of the company was good during the study period. B. Pardeshi, P.L. Bisoyi and P.C. Patil (2012) examined the financial solvency position of selected airline companies in India and concluded that the financial solvency position of Kingfisher Airlines is medium, as it belong to the grey zone, Jet Airways belong to distress zone as because itâs solvency position is very much poor and Spice Jet has the sound solvency position. M. Duvvuri (2012) examined the financial health of Nagarjuna Fertilizers and Chemicals Limited by using Z score model, developed by K.B. Mehta and concluded that the company entered in the grey area from bankruptcy zone and moving to the safe zone, so investors can invest to this company. S.C. Sheela and Dr. K. Karthikeyan (2012) analyzed the financial performance of selected Indian pharmaceuticals companies with the help of Altman Z score and reached to the conclusion that the companies belong to the healthy zone. Dr. M.M. Sulphey and Nisa. S (2013) attempted to analysis the solvency position of 220 companies listed in the BSE Small Cap Index by using Z score model and reached to the conclusion that 79 companies belong to the safe zone, 117 companies belong to grey zone and remaining 24 companies belong to distress zone during the study period. S. Ganguly (2013) examined the financial performance of Hindustan Motors Limited by using Z score model, developed by Prof. K. B. Mehta and he concluded that the overall financial position of the company is not satisfactory during the study period due to some internal and external issues. F. Hussain, I. Ali, S. Ullah and M. Ali (2014) investigated that can Altmanâs Z score model predict business failures and for this purpose they used 21 textile companies of Pakistan as sample, out of which 12 were non-bankrupted and remaining 9 were bankrupted organizations. They concluded that this model can predict the business failure up to four years prior to failure with a higher level of accuracy and this model is very much helpful to measure the financial soundness of any business concern.
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