Predicting financial distress in the Indian textile sector

Abstract

The purpose of this paper is to predict the financial distress of companies of the Indian textile sector using Altman Z score. The analysis conducted on 161 listed textile companies in India for a period of 10 years from 2009 to 2018. All the listed companies are categorized into large, medium, and small using the median split method based on the size of total assets. Kruskal Wallis test is applied to test whether the mean z-score is different for each category of companies. This research study shows that majority of the companies in the Indian textile sector are facing financial distress. Further, it shows that the z score of small, medium, and large-scale textile companies in India is significantly different.