RETROSPECTIVE ANALYSIS OF CORPORATE FAILURES – EVALUATING THE EFFECTIVENESS OF ALTMAN Z-SCORE, ZMIJEWSKI,GROVER & SPRINGATE MODELS FOR CAPTURING FINANCIAL DISTRESS IN NSE-LISTED COMPANIES OF INDIA
DOI:
https://doi.org/10.53555/eijbms.v11i1.224Keywords:
Financial Distress, Altman Z-Score, Grover ModelAbstract
This study evaluates the predictive accuracy of various financial distress models, including the Traditional Altman Z-Score (ZSO), Modern Z-Score (ZSN), Emerging Market Z-Score (ZEM), Zmijewski, Grover, and Springate models, in identifying financial distress in NSE-listed companies in India. The Traditional ZSO-Model demonstrated superior reliability, accurately predicting distress five years prior to the collapse of all eight analyzed companies, achieving a 100% accuracy rate. Conversely, the ZSN and ZEM models each exhibited a 62.5% accuracy rate, accurately predicting distress for only five out of eight companies. The Zmijewski model proved the most reliable among its peers, accurately predicting distress for six companies, whereas the Grover and Springate models displayed moderate accuracy. These findings suggest that while the Traditional Altman Z-Score model is highly effective for early distress prediction, the Modern and Emerging Market models require further refinement. Practitioners are recommended to utilize the Traditional model as the primary tool for financial distress prediction, with other models serving as supplementary aids. Continuous validation is essential to maintain model effectiveness in dynamic marketenvironments.
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