Do Z-Score and Current Ratio have Ability to Predict Bankruptcy?

Abstract

Altman’s Z-score Model (1968) is the Strongest Predictor of the bankruptcy and after its development many studies have been conducted to assess the financial viability of the corporate sector by using this model. This study used Z-Score model and Current Ratio to measure the Financial Failure of 22 selected Textile Industries of Pakistan. Results showed that Z-Score and current ratio are the good tools to assess the financial health of the textile companies listed in KSE. This study also revealed that financial distressed companies are also present in textile sector.

Keywords: Z-Score, Current ratio, Paired Sample T-Test, Financial Failure