Accounting Ratios and Bankruptcy Prediction: Woolworths Geoup PLC as A Case Study

Okuguni, Anthony I (2012) Accounting Ratios and Bankruptcy Prediction: Woolworths Geoup PLC as A Case Study. [Dissertation (University of Nottingham only)] (Unpublished)

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Abstract

ABSTRACT

This research attempts to ascertain the predictive ability of accounting ratios using Woolworths Group plc. This was achieved by carrying out Financial Ratio Analysis, Altman Z-score, Robertson R-ratio and Trend Analysis of Woolworths Group plc. In addition, the causes of bankruptcy at Woolworths Group plc would be ascertained. Finally the research would use mathematical models to ascertain the predictability of bankruptcy at Woolworths Group plc.

The main findings of this research were reduced consumer spending, reduced availability of finance, poor cash position and increased liabilities were identified to be the causes of bankruptcy at Woolworths Group plc. Traditional ratio analysis, Altman z-score and the Robertson R-ratio were effective tools in deducing the deteriorating financial position of Woolworths Group plc. Furthermore, these tools predicted bankruptcy accurately two years prior to its occurrence.

Finally, accounting ratios are most effective in presenting the financial position of a firm and predicting bankruptcy when they are used in conjunction with non-financial indicators and the use of mathematical models.

Keywords: Accounting Ratios, Bankruptcy, Going-concern, Profitability, Liquidity, Economic Recession, Altman z-score.

Item Type: Dissertation (University of Nottingham only)
Depositing User: EP, Services
Date Deposited: 31 Jul 2014 10:29
Last Modified: 25 Oct 2016 20:32
URI: http://eprints.nottingham.ac.uk/id/eprint/26062

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