Browsing by Author "Aderajew, Wondim"
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Item Fiancial Failure Prediction: An Empirical Study on Ethiopian Public Enterprises(A.A.U, 2003-02) Aderajew, Wondim; Tilahun, Teklu [PhD]The main purpose of this research is to throw light on a very challenging and perhaps forgotten issue of predicting corporate failure in Ethiopian public enterprises. The study tests and replicates a quantitative model for classifying and predicting serious financial problems of companies. It utilized a failure classification model developed by Altman in 1968 and updated continuously. A sample of 15 serious-problem enterprises is compared with the same number of healthy enterprises. Altman Z-Score Model successfully classified 80 percent of the enterprises one year prior to serious financial problems and as much as 70 percent two years prior. A comparable model replicated for the Ethiopian context, with a revised cut-off point, correctly classified 83 percent of the enterprises one year prior to serious financial problems and as much as 80 percent two years prior. In summary, the outcome of the research is expected to draw pointed attention to managers, government, lending institutions, suppliers, employees, and the community at large in assessing the financial health of an enterprise. III