Tests of the generalizability of Altman's bankruptcy prediction model

Bankruptcy Prediction Using Memetic Algorithm with Fuzzy Approach: Empirical Evidence from Iran

“…The primary goal of this model was to improve bankruptcy prediction accuracy rate while attempting to reduce occurrence of type I error, not ignoring the consequences of type II error since it can impose opportunity cost to investors. Grice and Ingram (2001) reported that Altman's Z-score model declined when applied to various industries. The samples of this paper are a mixture of different industries and variables used are obtained from firm's financial statements.…”

The Usefulness Of Analytical Procedures, Other Than Ratio And Trend Analysis, For Auditor Decisions

“…Altman developed the best known financial distress model that provides a discriminant function that classified companies as either failed or successful (Correia et al, 2011). Even though it was developed in 1968, it remains a commonly used tool for assessing companies' financial health (Grice & Ingram, 2001). Altman's Z-score is set out below: Altman determined that companies with a Z-score above 2.99 were unlikely to fail, a Z-score of lower than 1.81 indicated a likeliness to fail, but the section in between remained uncertain (Correia et al, 2011).…”

“…• Altman's Z-score is a standard benchmark to identify financial distress indicators as it is not sensitive to the type of financial distress (Grice & Ingram, 2001) and is therefore also useful in predicting loan default problems (Olson, Delen, & Meng, 2012). …”

“Slice-Of-Life” customization of bankruptcy models: Belarusian experience and future development

“…Indeed, all models are sensitive to some parameters that describe macro-economic environments, and any change may influence their accuracy [Mensah 1984;Platt, Platt, Pedersen 1994]. In practice, then, models need to be re-estimated frequently to counterbalance the effects of such phenomena [Grice, Ingram 2001].…”