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Abstract
The present study tests the predictive accuracy of three differentAltman’s scores in predicting distress on manufacturing companies in India considering registered bankrupt in BIFR (Board for Industrial and Financial Reconstruction) during the year 2014 to 2016. The finding from the study shows that on an average the original model of Altman i.e. (Edward I. Altman, 1968) is the most efficient distress prediction model as it is able to identifying higher number of distress firms in two to five year bracket before the distress takes place. Next is the revised Z score (1983) model. For predicting and identifying distress firms one year prior to distress (Altman E.I., 1983) seems to be the best models compared to the rest. The revised Z score (1995) model showed least predictive accuracy as it is able to identify less number of distress firms taken in this study, one of the sole reason for such outcome could be the exclusive design of this model solely for the non-manufacturing firms and as all the samples in our firms are manufacturing, for which the revised Z score (1995) showed less efficient compared to the rest. The findings of study could be useful for managers, investors and various stake holders.