Determinants of Financial Distress using the Zmijewski Model among Public Listed Consumer Product Companies in Malaysia
DOI:
https://doi.org/10.52962/ipjaf.2025.9.2.173Keywords:
Financial distress, financial ratios, Zmijewski Model, consumer product companies, MalaysiaAbstract
This study applies the Zmijewski Model to assess bankruptcy risk and financial distress among 56 publicly listed consumer product companies in Malaysia from 2019 to 2023. The model classifies firms as financially distressed (X > 0) or financially stable (X < 0) based on key financial ratios, including profitability, leverage, and liquidity. Results indicate that a majority of firms remain exposed to high financial risk, with companies such as Heineken Malaysia Berhad, Carlsberg Brewery Malaysia Bhd, and Nestlé (Malaysia) Berhad consistently exhibiting elevated Zmijewski scores above 4.0. Moderate-risk firms, with scores between 1.5 and 3.0, require careful monitoring to prevent escalation into severe distress. Conversely, a small subset of companies, including HB Global Limited and Bioalpha Holdings Berhad, demonstrated financial recovery through improved profitability, better debt management, and enhanced liquidity. The findings highlight the Zmijewski Model’s effectiveness in identifying financial vulnerability and underscore the importance of strategic financial management in mitigating bankruptcy risk.
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