Langford, D; Iyagba, R and Komba, D M (1993) Prediction of solvency in construction companies. Construction Management and Economics, 11(5), pp. 317-325. ISSN 01446193
Abstract
This paper reviews two models for testing the financial security of construction companies. It discusses the utility of the ratio analysis technique and the Z model in predicting whether companies are heading for insolvency. It then applies these techniques to three construction companies which failed within the last 5 years to test whether the theoretical predictions prescribed in the techniques are applicable to the construction industry. It concludes that whilst the techniques are of value in predicting some difficulties they need to be used in conjunction with financial performance data of other construction firms, in this way comparisons may be made. The development of a refined and construction specific Z model is recommended.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | financial performance; insolvency; ratio analysis; z model |
| Index terms: | construction firm, construction company, insolvency, financial performance, ratio analysis, testing, construction industry |
| Subjects: | organization, economic analysis, professional practice, business analysis, liability law, industry analysis |
| Topics: | Business Strategy, Research Practice, Engineering Principles, Legal Issues |
| Descriptive scope: | 4 PCTA |
N.B. Descriptive scope is a count of how many of the five facets of empirical research are indicated by the words used in title, abstract and keywords. It is not intended as a judgement on the research; merely a count of the kind of word we would expect to indicate Phenomenon, Concepts, Theoretical framing, Empirical techniques, Analytical techniques. If all five are present, then a code of “5 PCTEA” will indicate this. If you feel the coding for this record is questionable, we welcome discussion around the terms we matched or the way we categorized them. The facet you would expect may not be coded, or a facet may be coded inappropriately. This can also bear on a larger question, of which facets should be treated as defining in construction management research. Please get in touch, and we will look at it. More details here