Assessing the Financial Failure Using Z-Score and Current Ratio: A Case of Sugar Sector Listed Companies of Karachi Stock Exchange

Muhammad Shahzad Ijaz, Ahmed Imran Hunjra, Zahid Hameed, Adnan Maqbool and Rauf i Azam

MPRA Paper from University Library of Munich, Germany

Abstract: Since 1968, after the development of multivariate model, financial health of the corporate sector to predict their financial failure is heavily studied. Altman Z-Score is the most efficient model to judge the financial failure of the companies. This study uses Altman’s Z-Score and current ratio to assess the financial status of sugar sector companies listed at Karachi stock exchange. Sugar sector is the second largest slice among all sectors listed at Karachi stock exchange. Total population sampling technique was used in this study and all thirty five sugar sector listed companies at KSE were included in this study to get the deep insights of the issue. State bank’s balance sheet analysis and companies’ financial reports were used to compile the data for the years 2009 and 2010. The results of the study showed that current ratio and Altman’s Z-Score are the reliable tool of assessing financial health of sugar sector listed companies of Karachi stock exchange. This study further explores that there are financially distressed companies among sugar sector listed companies.

Keywords: current ratio; Z-Score; Karachi stock exchange; financial failure (search for similar items in EconPapers)
JEL-codes: G1 G32 G33 (search for similar items in EconPapers)
Date: 2013-06-09
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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