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Article: Applying Z-score model to distinguish insolvent construction companies in China

TitleApplying Z-score model to distinguish insolvent construction companies in China
Authors
KeywordsConstruction companies
Insolvency
Prediction model
Ratio analysis
Z-Score
Issue Date2011
PublisherPergamon. The Journal's web site is located at http://www.elsevier.com/locate/habitatint
Citation
Habitat International, 2011, v. 35 n. 4, p. 599-607 How to Cite?
AbstractFierce competition in the construction industry in China in recent years has brought many challenges to construction contractors. It is important that any potential company insolvency be recognized at the earliest opportunity. Using financial ratios and the Altman Z-score modelling methodology, an insolvency warning model is developed in order to evaluate the performance of construction contractors in China. The model derived from this study has consistent predictability based on a three-year window of data. It combines seven financial ratios, covering a company's finance of operation, profitability, solvency and cash flow. A single performance index is derived to differentiate whether a company has good financial standing or exhibits characteristics of insolvent companies. A mechanism to detect insolvent contractors is proposed for sustaining corporate development in construction. It is recommended for a contractor to develop a complete precaution system of financial crisis and have a regular checking of the key financial ratios as well as operation status so as to avoid insolvency. © 2011 Elsevier Ltd.
Persistent Identifierhttp://hdl.handle.net/10722/137264
ISSN
2015 Impact Factor: 2.029
2015 SCImago Journal Rankings: 1.038
ISI Accession Number ID
References

 

DC FieldValueLanguage
dc.contributor.authorThomas Ng, Sen_HK
dc.contributor.authorWong, JMWen_HK
dc.contributor.authorZhang, Jen_HK
dc.date.accessioned2011-08-26T14:21:52Z-
dc.date.available2011-08-26T14:21:52Z-
dc.date.issued2011en_HK
dc.identifier.citationHabitat International, 2011, v. 35 n. 4, p. 599-607en_HK
dc.identifier.issn0197-3975en_HK
dc.identifier.urihttp://hdl.handle.net/10722/137264-
dc.description.abstractFierce competition in the construction industry in China in recent years has brought many challenges to construction contractors. It is important that any potential company insolvency be recognized at the earliest opportunity. Using financial ratios and the Altman Z-score modelling methodology, an insolvency warning model is developed in order to evaluate the performance of construction contractors in China. The model derived from this study has consistent predictability based on a three-year window of data. It combines seven financial ratios, covering a company's finance of operation, profitability, solvency and cash flow. A single performance index is derived to differentiate whether a company has good financial standing or exhibits characteristics of insolvent companies. A mechanism to detect insolvent contractors is proposed for sustaining corporate development in construction. It is recommended for a contractor to develop a complete precaution system of financial crisis and have a regular checking of the key financial ratios as well as operation status so as to avoid insolvency. © 2011 Elsevier Ltd.en_HK
dc.languageengen_US
dc.publisherPergamon. The Journal's web site is located at http://www.elsevier.com/locate/habitatinten_HK
dc.relation.ispartofHabitat Internationalen_HK
dc.subjectConstruction companiesen_HK
dc.subjectInsolvencyen_HK
dc.subjectPrediction modelen_HK
dc.subjectRatio analysisen_HK
dc.subjectZ-Scoreen_HK
dc.titleApplying Z-score model to distinguish insolvent construction companies in Chinaen_HK
dc.typeArticleen_HK
dc.identifier.openurlhttp://library.hku.hk:4550/resserv?sid=HKU:IR&issn=0197-3975&volume=35&issue=4&spage=599&epage=607&date=2011&atitle=Applying+Z-score+model+to+distinguish+insolvent+construction+companies+in+China-
dc.identifier.emailThomas Ng, S:tstng@hkucc.hku.hken_HK
dc.identifier.authorityThomas Ng, S=rp00158en_HK
dc.description.naturelink_to_subscribed_fulltext-
dc.identifier.doi10.1016/j.habitatint.2011.03.008en_HK
dc.identifier.scopuseid_2-s2.0-79959278741en_HK
dc.identifier.hkuros204786en_US
dc.relation.referenceshttp://www.scopus.com/mlt/select.url?eid=2-s2.0-79959278741&selection=ref&src=s&origin=recordpageen_HK
dc.identifier.volume35en_HK
dc.identifier.issue4en_HK
dc.identifier.spage599en_HK
dc.identifier.epage607en_HK
dc.identifier.eissn1873-5428-
dc.identifier.isiWOS:000293056900010-
dc.publisher.placeUnited Kingdomen_HK
dc.identifier.scopusauthoridThomas Ng, S=7403358853en_HK
dc.identifier.scopusauthoridWong, JMW=30067976000en_HK
dc.identifier.scopusauthoridZhang, J=37078658900en_HK
dc.identifier.citeulike9186685-

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