Financial Distress Prediction of Airlines Companies

Authors

  • Afiruddin Tapa School of Finance and Banking, College of Business, Universiti Utara Malaysia
  • Nurfarah Lyana Ahmad Razif Universiti Utara Malaysia Kuala Lumpur, Universiti Utara Malaysia

DOI:

https://doi.org/10.52962/ipjaf.2021.5.2.129

Keywords:

Financial Distress, Altman Z-Score Model, Springate Model, Zmijewski Model

Abstract

The purpose of this study is to compare three financial failure models: the Altman Z-Score Model, the Springate Model, and the Zmijewski Model, in terms of predicting financial difficulty among airlines in Asia and the Middle East. Based on the results of this study, it is proven by the result of the analysis done for Airlines in Asia and the Middle East that all the three models have predicted that these companies are in financial distress. But, the Altman Z-Score model is the most significant model to forecast financial distress. Although the models employ different ratios in their analyses, this study demonstrates that there is a substantial difference in the analysis of these three models. Another independent T-test demonstrates that the Altman Z-Score Model and the Zmijewski Model, as well as the Springate Model and the Zmijewski Model, have substantial differences. The study employed a descriptive and comparative analysis method, and this model was created to compare the independent variables. The Altman Z-Score model is the most significant model for predicting the financial failure of enterprises, according to the descriptive analysis in this study. While the comparison findings show a large difference between the Altman Z-Score Model and the Zmijewski Model, there is also a significant difference between the Springate Model and the Zmijewski Model. The Altman Z-Score Model and the Springate Model, on the other hand, imply that there is no significant model.

Published

2021-04-10

How to Cite

Tapa, A., & Ahmad Razif, N. L. (2021). Financial Distress Prediction of Airlines Companies. Indian-Pacific Journal of Accounting and Finance, 5(2), 3–15. https://doi.org/10.52962/ipjaf.2021.5.2.129

Issue

Section

Main Section