Using Altman’s Z score (Sales/Total Assets) Ratio Model in Assessing Likelihood of Bankruptcy for Sugar Companies in Kenya
Journal Title: International Journal of Academic Research in Business and Social Sciences - Year 2019, Vol 8, Issue 6
Abstract
The purpose of this study was the use of sales/total assets as one of the z score ratios model in predicting likelihood of bankruptcy of sugar companies in Kenya. The focus of the study was on the following public owned sugar companies: Mumias sugar, Nzoia sugar, Miwani sugar, South Nyanza Sugar Company, Muhoroni Sugar Company and Chemelil Sugar Company. And the following private owned sugar companies: West Kenya sugar, Butali Sugar Company, Kibos sugar and Allied Industries and Sukari Industries Limited. This study was prompted by continued financial difficulties in sugar companies in Kenya, and more so a few related studies have been carried out in this area in Kenya. A descriptive research design which seeks to determine and report the way things are was used to conduct the study. The population of the study comprised of the 12 sugar companies in Kenya both Public Owned and Private Owned as per Sugar Directorate year book 2016.Using purposive sampling technique all public owned sugar companies from western and south Nyanza were selected for the study and the 4 private owned sugar companies out of 6 whose secondary data were available for the study. Secondary data which was obtained from the company’s financial statements which include the statement of financial position and statement of comprehensive income with the help of data collection sheets for a period of ten years period from (2007-2016) for Public owned Sugar Companies and for a period of five years from (2011 - 2015) for Private owned Sugar Companies the study was enriched with the following theories: resource dependence theory and entropy theory. The study concluded that sales/total assets ratio does not significantly influence the likelihood of bankruptcy of sugar companies in Kenya.
Authors and Affiliations
Maurice Mwita Range, Agnes Njeru, Gichuhi. A. Waititu
Keywords
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- EP ID EP564329
- DOI 10.6007/IJARBSS/v8-i6/4264
- Views 97
- Downloads 0
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