Predictive analysis of corporate default in Indian Manufacturing BSE listed companies using Altman’s Z-Score Model

Abstract

This study investigates the cogency and accuracy of Altman’s Z model in predicting default or financial distress in manufacturing companies in India. The study uses a balanced sample of 40 manufacturing firms of 20 firms are defaulting and 20 non-defaulting firms listed on BSE over a period of five years from 2015-2019. The study utilize listed manufacturing firm’s data across 5 years composed a balance default and non-default (20 each) firms. The findings of research suggest that Altman model is still effective with an accuracy of 81% even after dramatic changes in manufacturing sector across globe in general and India in particular help stakeholders to make more sound decision and 81% classification accuracy demonstrate model’s robustness.