Financial Soundness of Cement Industry of Bangladesh: An Empirical Investigation Using Z-score
DOI:
https://doi.org/10.18034/ajtp.v1i1.357Keywords:
Cement industry, Financial soundness, Prediction, Z-scoreAbstract
For measuring the financial health of a business firm, there are lots of techniques available. But the Altman’s Z-score has been proven to be a reliable tool across contexts. Bangladesh cement industry is a unique one because, the industry is producing a higher amount of cement than the local demand having no supply of local raw materials. The main objective of the study is to assess the fundamental financial health of this industry using Z-score model. All listed cement firms are considered in this study. The required information has been collected from the annual reports of the selected companies and from other sources. The study revealed that two firms, Heidelberg cement and Confidence Cement, are financially sound whereas other three are not in a good position. The findings of the study can be useful for the managers to take financial decision, the stockholders to choose investment options and others to look after their interest in the concern cement manufacturers of the country.
Downloads
References
Abbas, Q. and Rashid, A. (2011). “Modeling Bankruptcy Prediction for Non-Financial Firms: The Case of Pakistan”, MPRA Paper No. 28161, available at http://mpra.ub.uni-muenchen.de/28161, retrieved on January 26, 2012.
Addullah, N.A.H., Halim, A., Ahmad, H. and Rus, R.M. (2008). “Predicting Corporate Failure of Malaysia’s Listed Companies: Comparing Multiple Discriminant Analysis, Logistic Regression and the Hazard Model”, International Research Journal of Finance and Economics, 15: 201-217.
Alkhatib, K. and Al Bzour, A.E. (2011). “Predicting Corporate Bankruptcy of Jordanian Listed Companies: Using Altman and Kida Models”, International Journal of Business and Management, 6(3): 208-215.
Al-Rawi, K, Kiani, R. and Vedd, R.R. (2008). “The Use of Altman Equation for Bankruptcy Prediction in an Industrial Firm (Case Study)”, International Business & Economics Research Journal, 7(7): 115-127.
Altman, E.I. (1968). “Financial Ratios, Discriminant Analysis and the Prediction of Corporate Bankruptcy”, The Journal of Finance, 23(4): 589-609.
Begley J., Ming J. and Watts S. (1996). “Bankruptcy classification errors in the 1980s: An empirical analysis of Altman’s and Ohlson’s models”. Review of Accounting Studies, 1(4):267-284.
Bongini, P., Ferri, G. and Hahm, H. (2000). “Corporate Bankruptcy in Korea: Only the Strong Survive?”, The Financial Review, 35: 31-50.
Chava, S. and Jarrow, R.A. (2004). “Bankruptcy Prediction with Industry Effects”, Review of Finance, 8: 537-569.
Chen K. H. and Thomas A. Shimerda. (1981). “An Empirical Analysis of Useful Financial Ratios”, Financial Management, 10(1): 51-60.
Chowdhury, A. and Barua, S. (2009). “Rationalities of z-category shares in Dhaka Stock Exchange: are they in financial distress risk?”, BRAC University Journal, 1(1): 45-58.
Gerantonis, N., Vergos, K. and Christopoulos, A.G. (2009). “Can Altman Z-score Models Predict Business Failures in Greece?”, Research Journal of International Studies, 12: 21-28.
Kida, C.Y. (1998). “Financial Ratios as Predictors of Bankruptcy in Japan: An Empirical Research”, Journal of Finance, 123: 589-609, cited in Alkhatib, K. and Al Bzour, A.E. (2011). “Predicting Corporate Bankruptcy of Jordanian Listed Companies: Using Altman and Kida Models”, International Journal of Business and Management, 6(3): 208-215.
Mizan, A.N.K., Amin, M.R. and Rahman, T. (2011). “Bankruptcy Prediction by Using the Altman Z-score Model: An Investigation of the Pharmaceutical Industry in Bangladesh”, Bank Parikrama, 36(2-4): 33-56.
Morris, R. (1998). “Bankruptcy Prediction Models: Just How Useful Are They?”, Credit Management, pp. 43-45, cited in Al-Rawi, K, Kiani, R. and Vedd, R.R. (2008). “The Use of Altman Equation for Bankruptcy Prediction in an Industrial Firm (Case Study)”, International Business & Economics Research Journal, 7(7): 115-127.
Ramaratnam, M.S. and Jayaraman, R. (2010). “A study on measuring the financial soundness of select firms with special reference to Indian steel industry – An empirical view with Z score”, Asian Journal of Management Research, Online Open Access publishing platform for Management Research, pp. 724-735.
Shirata, C.Y. (1998). “Financial Ratios as Predictors of Bankruptcy in Japan: An Empirical Research”, Paper presented in the Second Asian-Pacific Interdisciplinary Research in Accounting Conference Program (APIRA98) held on 4th - 6th August, 1998, available at http://www3.bus.osaka-cu.ac.jp/apira98/archives/pdfs/31.pdf, retrieve on January 25, 2012.
Shumway, T. (2001). “Forecasting bankruptcy more accurately: A simple hazard model”, Journal of Business, 74(1): 101-124, cited in Chava, S. and Jarrow, R.A. (2004). “Bankruptcy Prediction with Industry Effects”, Review of Finance, 8: 537-569.
Zmijewski, M. E. (1984). “Methodological issues related to the estimation of financial distress prediction models”, Journal of Accounting Research, 22(1): 59–82, cited in Chava, S. and Jarrow, R.A. (2004). “Bankruptcy Prediction with Industry Effects”, Review of Finance, 8: 537-569.
--0--
Published
Issue
Section
License
American Journal of Trade and Policy is an Open Access journal. Authors who publish with this journal agree to the following terms:
- Authors retain copyright and grant the journal the right of first publication with the work simultaneously licensed under a CC BY-NC 4.0 International License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this journal.
- Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of their work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgment of its initial publication in this journal. We require authors to inform us of any instances of re-publication.
How to Cite
