IIARD International Institute of Academic Research and Development

WORLD JOURNAL OF FINANCE AND INVESTMENT RESEARCH (WJFIR )

E-ISSN 2550-7125
P-ISSN 2682-5902
VOL. 8 NO. 5 2024
DOI: 10.56201/wjfir.v8.no5.2024.pg167.178

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Corporate Failure Prediction Tools: A Comprehensive Analysis of Altman Z-Score and Argenti A-Score Models in Financial Distress Assessment

Prof. Aliyu IDRIS Haruna DZUGWAHI, PhD

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Abstract

Corporate Failure Prediction Tools are sophisticated analytical frameworks designed to assess and forecast the probability of financial distress and bankruptcy. These tools provide critical insights for investors, creditors, and financial analysts by evaluating a company's potential risk of economic collapse. The study examines two prominent models: the Altman Z- Score and Argenti A-Score methodologies. The Altman Z-Score, developed in 1968, utilises multiple discriminant analyses to evaluate five key financial ratios, categorising companies into safe, grey, and distress zones. The Argenti A-Score complements this approach by incorporating subjective managerial assessments and examining organisational defects, potential mistakes, and early warning symptoms. These prediction tools offer a comprehensive approach to understanding corporate financial health by integrating quantitative financial metrics and qualitative organisational indicators. The research underscores the importance of dynamic, multi-dimensional analysis in predicting and mitigating potential corporate failures.

keywords:

Corporate Failure Prediction, Financial Risk Assessment, Bankruptcy Modeling,

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References:

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