An Assessment of Financial Stability of Textile Sector of Pakistan: An Altman Z Score Approach

Peeral Chandio and Arifa Bano Talpur

Sustainable Business and Society in Emerging Economies, 2021, vol. 3, issue 3, 309-318

Abstract: Purpose: The study purpose is to examine the financial stability of Pakistani textile enterprises. Investment towards textile is crucial to boost the textile sector’s financial performance, which can be analyzed by adopting the model of Altman Z-score.Design/Methodology/Approach: The Altman Z-score approach is a method, applied to analyze the financial stability of textile firms for seven years from 2013-2014 to 2019-2020 through the annual reports of textile firms which were taken from companies’ website and PSX links. Quantitative analysis is done by MS-Excel using simple random sampling technique of secondary data of 10 firms taken from 5% listed companies.Findings:Finding of the study shows that financial performance of textile sector lies in all three zones of safe, grey and distress zones. 30% of textile sector falls in safe zone, 40% falls in grey while only 30% of textile sector of Pakistan falls in distress zone. Average result of textile sector of Pakistan is in grey zone, which shows the companies can get safe zone if they control required ratios.Implications/Originality/Value: Result shows that textile firms of Pakistan may improve financial performance and stability because it lies in grey zone by controlling their financial ratios which are the part of Altman Z-Score model.

Keywords: Textile; Stability; Bankruptcy; Financial Ratios; Altman Z-Score (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:src:sbseec:v:3:y:2021:i:3:p:309-318

DOI: 10.26710/sbsee.v3i3.1957

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