A company’s financial soundness or financial health depends on the ability to pay its current debt obligation. In the business world, several techniques are typically used to assess a company's financial stability. However, the Z-score model created by Professor Edward I. Altman in 1968 is now recognized as the most precise and reliable tool for predicting a company's financial distress or risk of bankruptcy. Here, Multiple Discriminate Analysis (MDA) is used to consolidate the effect of all ratios. In this study, the Z-Score is used to forecast the financial distress status of Bangladesh's top five pharmaceutical companies. Secondary data sources have been used to facilitate the study. The study identifies that the financial positions of Square Pharmaceutical Ltd. are far better than those of the other four selected pharmaceutical companies in Bangladesh, whereas Beximco and Beacon Pharmaceutical's Z-score values fluctuate over time. The study's findings can help investors and others who are interested in Bangladesh's pharmaceutical sector make investment decisions.
Keywords: Financial distress, Altman’s Z-score, Bankruptcy, Pharmaceutical companies.
DOI: https://doi.org/10.61921/kyauj.v06i01.002
31-Aug-2024
