Predication of Company Bankruptcy using Altman-Z Score and Ohlson O-Score

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Predication of company bankruptcy by
using two models: Altman-Z score and
Ohlson o-score

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Table of Contents
Introduction......................................................................................................................................3
Research Question.......................................................................................................................3
Research Methodology................................................................................................................3
Research Findings........................................................................................................................3
Literature Review............................................................................................................................3
The case of Organisational Bankruptcy.......................................................................................3
Reasons for Bankruptcy...............................................................................................................4
Altman’s Z-Score Model.............................................................................................................4
Applicability of the Altman’s Z-Score Model.............................................................................5
The Ohlson’s O-Score Model......................................................................................................6
Application of Ohlson’s o score based on Logit Analysis..........................................................6
Research Question/Hypotheses.......................................................................................................9
Proposed Research Methods............................................................................................................9
Research Paradigm......................................................................................................................9
Research Design..........................................................................................................................9
Research Strategy........................................................................................................................9
Sampling....................................................................................................................................10
Data Collection..........................................................................................................................10
Data Analysis.............................................................................................................................10

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Expected Results............................................................................................................................11
Conclusion.....................................................................................................................................11
References......................................................................................................................................12

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Introduction
Background
The chances for business organisations to go into bankruptcy tend to alarm the investors. The
investors thereby focus on evaluating the risks associated to the occurrence of bankruptcy and
thereby focus on using models like Ohlson’s O-Score or Altman’s Z-Score for deciding on future
courses of action regarding generation of investments to the firms facing financial and economic
risks.
Research Question
Q.1. What is company bankruptcy and why does it tend to occur?
Q.2. Is the Altman’s Z-Score Model more efficient in predicting the occurrence of company
bankruptcy compared to Ohlson’s O-Score model or vice-versa?
Research Methodology
Use of both secondary with that of quantitative research methodology would be employed for
understanding the significance of Altman’s Z-Score Model over Ohlson’s O-Score model and
vice-versa associated to predicting the occurrence of bankruptcy in firms.
Research Findings
The findings of the research activity tend to reflect that whether Ohlson’s O-Score Model is
more efficient and effective in predicting the occurrence of bankruptcy in organisations