World Research of Business Administration Journal
Vol.1 No.1 November 2021
DOI https://www.doi.org/10.56830/WRBA11202105
Authors
Heba Srour
Marwa El Maghawry
Abstract
Financial performance has been of concern to management and other stakeholders
since the 2008 financial crisis. The impact of financial distress and bankruptcy on
firms cannot be taken for granted. Financial distress is detrimental to big
organizations and the small organizations alike. This study was conducted with the
purpose testing if Altman’s failure prediction model is good indicator in predicting
financial distress of firm working in Egyptian stock market. The study took a sample
of seven companies from firms working in Egyptian stock market during the period
from 2016 to 2020. Data was extracted from secondary sources for a period of five
years. Data extracted included working capital, total assets, retained earnings,
market capitalization total liabilities and sales. The collected data was then
analyzed using Microsoft excel software. The study established that the Altman’s
Z-score model was good indicator for predicting financial distress of firm working
in Egyptian stock market. The study recommends the adoption of Altman’s failure
prediction model in predicting financial distress of firm working in Egyptian stock
market by not only investors but also all other stakeholders.
Keywords: Altman Z-score – Financial Distress – Prediction Models – Egyptian
Stock Markets
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