Default Prediction using Altman Z Score Model-AStudy of some Select Retail Firms

The ongoing mega process of globalisation characterised by unprecedented liberalisation, privatisation, marketisation and multinationalisation have opened up the markets and businesses like never before. This era has brought with it both challenges and opportunities for the businesses. Businesses are striving hard to tap the opportunities and survive in this hyper competitive market. Finance being the life blood and backbone of the organisation is measured for its soundness, because a financially sound firm can alone survive in such conditions. The most insidious reason for a firm's distress and possible failure is managerial incompetence (Chang et al, 2013). Therefore, investors have to be cautious in predicting the bankruptcy of the firm. In this backdrop, this paper studies the probability of default of select retail firms for five year period (2012–13 to 2016–17). The results reveal that of the five firms selected, three are in distress zone and have the maximum likelihood of going bankrupt, while the stock prices of those firms does not signal any such information.