Bankruptcy risk Analysis using Financial Ratios for Companies of Property Development Sector in The Stock Exchange of Thailand
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Abstract
The objectives of this paper were (1) to analyze the level of risk (financial distress) in Property Development sector companies in the Stock Exchange of Thailand and (2) to study the relationship between financial ratios and the systematic risk (β) of these firms. The samples were 55 companies of Property Development sector in the Stock Exchange of Thailand. The research presented Altman’s Z-Score Model as the research instruments and it analyzed the relationship between financial ratios and the systematic risk (β) by Pearson’s correlation coefficient. The research found that (1) the level of risk in these companies were very low to bankruptcy chance and (2) The relationship between financial ratios and the systematic risk (β) was at the medium level. The firm’s working capital divided by its total assets, the firm’s retained earnings divided by its total assets, the firm’s earnings before interest and taxes divided by its total assets and the firm’s sales divided by its total assets related to systematic risk (β) on the opposite site while the market value of the firm’s equity and preferred stock divided by its liabilities related to systematic risk (β) on the same way.
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References
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