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Title: Predicting corporate bankruptcy and earnings manipulation using the Altman Z-score and Beneish M score. The case ofZ manufacturing firm in Zimbabwe
Authors: Mavengere, Kudakwashe
Keywords: Altman’s Z-score model
Beneish M-score model
earnings manipulation
Issue Date: Oct-2015
Publisher: International Journal of Management Sciences and Business Research
Series/Report no.: International Journal of Management Sciences and Business Research;4 (10)
Abstract: The study sought test the validity of the Atlman Z Score (bankruptcy prediction) and the Beneish M score (earnings manipulation) as investment models that can be adopted in entity financial statements analysis by stakeholders. The study utilised financial statements obtained from entity Z’s website from the periods 2011 to 2014. The results reveal entity as in the “grey zone” using the Altman Z Score model in 2011 whilst 2012 to 2014 discovers financial distress. The Beneish m score reveals entity Z an earnings manipulator for 2010 and 2014 with m scores of -2.11 and -0.10. Days Receivables in Sales (DSRI) for 2010 of 1.53 is superiorto the manipulators mean of 1.465, with gross margin index (GMI) in 2013 of 1.51 and 4.83 in 2014 which are greater than manipulators mean of 1.193.The results thus validate the use of Altman z score in predicting bankruptcy and Beneish m score in detecting earnings manipulation when compared with secondary data relating to the entity
ISSN: 2226-8235
Appears in Collections:Department of Accounting and Finance

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