APPLICATION OF EDWARD ALTMAN Z SCORE MODEL ON MEASURING FINANCIAL DISTRESS OF COMMERCIAL BANKS LISTED ON RWANDA STOCK EXCHANGE (2015-2019)

CPA, ALPHONSE NTAWUMENYUMUNSI, CPFMA, CPA, FA, ELIJAH KIHOOTO MARINGA

Abstract


The overall aim of this research was to assess how factors of financial distress affected the financial performance of Commercial Banks listed on RSE from 2015 to 2019 by applying Altman failure prediction model. The researcher targeted 3 Banks in this study. This concerned Bank of Kigali Plc (BK Plc), Kenya Commercial Bank Ltd (KCB Ltd) and I&M Bank Plc. Establishing whether liquidity as a factor of the distress affects the financial performance of commercial banks was the first objective of this study. The rise from 22.1, 23.8 and 50.7 percent of demand deposits, quasi money and treasury bills holding from the period 2016 to 2019 is the main cause of operating with liquidity problems as revealed by the study. The application of Z-Score model revealed that there is a highly likelihood that the bankruptcy will occur because Z-Score is below 1.8 for all 3 Banks under study for five years. 

Key words: Factors of Financial Distress, High Likelihood of Bankruptcy

CITATION:  Ntawumenyumunsi A., & Maringa, E. K. (2022). Application of Edward Altman Z Score model on measuring financial distress of commercial banks listed on Rwanda Stock Exchange (2015-2019). The Strategic Journal of Business & Change Management, 9 (1), 130 – 146.


Full Text:

PDF

References


Agrawal M.R., (2003), Financial Management, 1st Edition, RBSA Publishers, Jaipur, p. 386

Brigham Eugene F., and Houston Joel F., (2009), Fundamentals of Financial Management, 10th Edition (Indian), Cengage Learning, New Delhi, p. 565

C. A. Rama Gopal C., (2008), Financial Management, 4th Edition, New Age International (P) Ltd. Publishers, New Delhi, p. 341

Hossain Syed Zabid, (1999), Evaluation of Working Capital Management Through Accounting Ratios - A Suggested Framework, Working Capital Management, Edited by Rao Mohana D and Pramanik Alokkumar, Deep and Deep Publications Pvt. Ltd, New Delhi, pp. 1-11

Khan A.A., (1990), Working Capital Analysis, 1stEdition, Print well Publishers, Jaipur, p. 82

Khandelwal N.M.,(1985),Working Capital Management in Small Scale Industries, 1st Edition, Ashish Publishing House, New Delhi, p. 3

Kulkarni P. V., and Satyaprasad B. G., (2011), Financial Management – A Conceptual Approach, 13th Edition, Himalaya Publishing House, Mumbai, p. 704

Reddy Sudarsana G., (2013), Financial Management - Principles and Practice, 3rd Revised Edition, Himalaya Publishing House, Mumbai, p. 526

Roy Suvendu Narayan, (2013), Financial Management with New approach, 1st Edition, Himalaya Publishing House, Mumbai, p. 144




DOI: http://dx.doi.org/10.61426/sjbcm.v9i1.2169

Refbacks

  • There are currently no refbacks.


Creative Commons License
This work is licensed under a Creative Commons Attribution 3.0 License.

PAST ISSUES:
20242023202220212020201920182017201620152014
Vol 11, No 2 [2024]Vol 10, No 4 [2023]Vol 9, No 4 [2022]Vol 8, No 4 [2021]Vol 7, No 4 [2020]Vol 6, No 4 [2019]Vol 5, No 4 [2018]Vol 4, No 4 [2017]Vol 3, No 4 [2016]Vol 2, No 2 [2015]Vol 1, No 2 [2014]
 Vol 11, No 1 [2024] Vol 10, No 3 [2023] Vol 9, No 3 [2022]Vol 8, No 3 [2021]Vol 7, No 3 [2020]Vol 6, No 3 [2019]Vol 5, No 3 [2019]Vol 4, No 3 [2017]Vol 3, No 3 [2016]Vol 2, No 1 [2015]Vol 1, No 1 [2014]
  Vol 10, No 2 [2023] Vol 9, No 2 [2022]Vol 8, No 2 [2021]Vol 7, No 2 [2020]Vol 6, No 2 [2019]Vol 5, No 2 [2018]Vol 4, No 2 [2017]Vol 3, No 2 [2016]  
  Vol 10, No 1 [2023] Vol 9, No 1 [2022]  Vol 8, No 1 [2021]Vol 7, No 1 [2020]Vol 6, No 1 [2019]Vol 5, No 1 [2018]Vol 4, No 1 [2017]Vol 3, No 1 [2016]   


Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.