Application of Z–Score and Z-3 Score Models to Evaluate the Financial Situation of the Modern Sewing Company: A Case Study

Abstract

The purpose of this research work is to examine the financial position of the company studied using Altman’s Z-score and Z-3 score models. We are interested in identifying the financial position of the Modern Sewing Company (MSC) working in Iraq. The study focused on the importance, causes, symptoms of financial failure and distress. When the question deals with the potential effects on the wealth of creditors, stockholders, and society as a whole, researchers consider a company's distress and bankruptcy to be the most important issue to be studied. The Altman Z-score and Altman Z-3 Score models were applied on the financial data of the MSC to investigate and to predict the financial position of MSC between 2016 - 2022. The analysis conducted in this research work was based on the secondary extracted data From the financial statement of the company available on the listed companies at the Iraqi Securities Commission (isc.org.iq). According to the Altman Z-Score the MSC faced financial failure in 2016 and 2020, while according to Altman Z-3 score it was far away from financial failure during 2016-2022. This research is important because it provides investors and the MSC with information to guide their investments. The value and importance of research related to the study of financial failure prediction models in the industrial sector in Iraqi are somewhat rare and requires more deep analysis due to the uncertainty in the Iraqi economy. The financial research also seeks to explain failure models and the extent to which investors benefit from these models.: