Evaluation of Altman Z Score on Nifty 50 Selected Stocks

Dr. Anilkumar G. Garag

doi:https://doi.org/v3i1.01

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Evaluation of Altman Z Score on Nifty 50 Selected Stocks

Anilkumar G. Garag

https://doi.org/v3i1.01

Published Online: August 18, 2017

Author Details ( * ) denotes Corresponding author

1. * Anilkumar G. Garag, Professor and Director, MBA, Global Business School, Hubli, Karnataka, India (anilgarag@globalbschool.in)

The recent developments in the banking and corporate sector has called for an urgent need to verify the bankability of the corporate sector. RBI has initiated a clean-up of the banking sector and has advised the Banks to recognise their correct NPAs and get provisioning done for cleaning up the Balance Sheets. With this Background in mind a study was undertaken to evaluate the NIFTY 50 selected companies with Altman Z score model. The paper has examined relationship of important dimensions of the companies’ financial statements and also stock market performance of the companies. Out of Nifty 50 companies the study selected 40 companies. The study has excluded Banking and Financial Services firms. Z-scores are used to predict corporate defaults and are an easy-to-calculate control measure for the financial distress status of companies in academic studies. The Zscore uses multiple corporate income and balance sheet values to measure the financial health of a company.

Keywords

Credit Rating; Bankruptcy; Financial Distress; Z-Score

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