About this paper

Appears in:
Pages: 8319-8327
Publication year: 2017
ISBN: 978-84-617-8491-2
ISSN: 2340-1079
doi: 10.21125/inted.2017.1961

Conference name: 11th International Technology, Education and Development Conference
Dates: 6-8 March, 2017
Location: Valencia, Spain

FINANCIAL DISTRESS MODEL ACCORDING TO “Z MODEL” APPLIED TO MEXICAN STOCK EXCHANGE

J.G. de la Vega Meneses

Universidad Popular Autonoma del Estado de Puebla (MEXICO)
Financial difficulties are not an avoidable situation in the future for any company. This situation could emerge due to the combined effects of excessive financial leverage and greater competitiveness in markets.

These factors are relevant when they are accompanied by economic crises or financial difficulties in the international economic situation, affecting as the headquarters and the countries in which the company has facilities and develops its activities. In this context, it is possible to evaluate the degree of resilience of companies using analysis of financial statements. A model based on this financial analysis that has been used since decades ago in predicting bankruptcy of companies is the “Z-score” model developed by Edward Altman.

This document include for academic proposals, an explanation about the relevance of understanding the time value of the money and the main indicators involved in this determination, in order to relate the healthy financial position of a company with adequate cash flows that results in optimal returns and moderate risks. The Z-score, which can be applied mainly to companies traded on stock exchanges, has been used in the present study in order to estimate the probability of bankruptcy of the companies that comprise the Mexican Stock Exchange, at the end of the year 2015.

The objective of this research is to deepen the understanding of financial distress applied to Mexican companies, developing an interesting source of academic literature for educational purposes related to finance and accounting.

The methodology applied in this document has been developed in order to introduce students to important techniques related to measure financial distress in companies, techniques that are used in empirical finance and to facilitate an awareness in students of how these techniques can be applied.

Subsequently, the research concludes with an academic proposal in order to identify the financial distress in companies, according to the Z-Score developed by Edward Altman.
@InProceedings{DELAVEGAMENESES2017FIN,
author = {de la Vega Meneses, J.G.},
title = {FINANCIAL DISTRESS MODEL ACCORDING TO “Z MODEL” APPLIED TO MEXICAN STOCK EXCHANGE},
series = {11th International Technology, Education and Development Conference},
booktitle = {INTED2017 Proceedings},
isbn = {978-84-617-8491-2},
issn = {2340-1079},
doi = {10.21125/inted.2017.1961},
url = {http://dx.doi.org/10.21125/inted.2017.1961},
publisher = {IATED},
location = {Valencia, Spain},
month = {6-8 March, 2017},
year = {2017},
pages = {8319-8327}}
TY - CONF
AU - J.G. de la Vega Meneses
TI - FINANCIAL DISTRESS MODEL ACCORDING TO “Z MODEL” APPLIED TO MEXICAN STOCK EXCHANGE
SN - 978-84-617-8491-2/2340-1079
DO - 10.21125/inted.2017.1961
PY - 2017
Y1 - 6-8 March, 2017
CI - Valencia, Spain
JO - 11th International Technology, Education and Development Conference
JA - INTED2017 Proceedings
SP - 8319
EP - 8327
ER -
J.G. de la Vega Meneses (2017) FINANCIAL DISTRESS MODEL ACCORDING TO “Z MODEL” APPLIED TO MEXICAN STOCK EXCHANGE, INTED2017 Proceedings, pp. 8319-8327.
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