Comparative Analysis of Financial Health of Selected Indian Metals and Mining Companies Using the Altman Z-Score, And Zmijewski Models

Abstract

The mining and metals industry holds significant importance in the global economy and is crucial for India's economic growth. This study delves into the financial stability of Indian Metals and Mining Companies using two prominent insolvency prediction models: Altman's Z-Score and Zimjewski's X-Score. The research period spans three years from 2019-20 to 2021-22. Data analysis employs both quantitative and qualitative research methods with descriptive statistics and various tests, relying on secondary data sources from credible institutions like the Money Market and Capitaline. The study's sample size includes ten Indian Metals and Mining Companies, evaluating their financial health and bankruptcy risk. Altman's Z-Score, a metric incorporating multiple financial ratios, indicates the likelihood of bankruptcy for manufacturing industries. Meanwhile, Zimjewski's X-Score model forecasts bankruptcy within two years using net income to total assets ratio, total debt to total assets ratio, and current assets to current debt ratio. The results demonstrate a range of financial stability scores among the selected companies, with some exhibiting consistently low bankruptcy risks, while others show fluctuations. The study's findings emphasize the importance of financial analysis in assessing the stability of companies in the metals and mining sector. The research contributes valuable insights for investors, creditors, and financial analysts, aiding informed decision-making processes and promoting economic stability within the industry. The study uses secondary data sources but faces issues like data availability and potential mistakes. The sample size is small, with only ten Indian Metals and Mining Companies. To improve data accuracy, researchers should cross-reference data, confirm it with financial reports, and expand the sample size. The findings can help investors, creditors, and legislators make informed decisions.