Applying Z-score model in predicting bankruptcy of enterprises in Vietnam

Abstract

 There are many research models which have been built by researchers to assess and forecast bankruptcy risks of businesses based on published corporate financial information. Each model has its advantages and disadvantages. Altman’s Z-score model (1968) is considered to be the original model applied by many researchers to different countries to forecast credit risk, bankruptcy risk. The paper is done to apply the Z-score coefficient model to evaluate the correct forecasting rate of the model with Vietnamese enterprises through collecting data of 30 bankrupts and 30 enterprises is operating at the time of research. The research results show that the accuracy of the Z-score model for bankruptcy forecast of enterprises in Vietnam for a year before bankruptcy is 76,67% and for 2 years before the bankruptcy is 70%. Accordingly, investors who are interested in the financial situation of the business can fully use the Z-score model for risk assessment before making their decision.