The purpose of this study was the use of sales/total assets as one of the z score ratios model in predicting likelihood of bankruptcy of sugar companies in Kenya. The focus of the study was on the following public owned sugar companies: Mumias sugar, Nzoia sugar, Miwani sugar, South Nyanza Sugar Company, Muhoroni Sugar Company and Chemelil Sugar Company. And the following private owned sugar companies: West Kenya sugar, Butali Sugar Company, Kibos sugar and Allied Industries and Sukari Industries Limited. This study was prompted by continued financial difficulties in sugar companies in Kenya, and more so a few related studies have been carried out in this area in Kenya. A descriptive research design which seeks to determine and report the way things are was used to conduct the study. The population of the study comprised of the 12 sugar companies in Kenya both Public Owned and Private Owned as per Sugar Directorate year book 2016.Using purposive sampling technique all public owned sugar companies from western and south Nyanza were selected for the study and the 4 private owned sugar companies out of 6 whose secondary data were available for the study. Secondary data which was obtained from the company’s financial statements which include the statement of financial position and statement of comprehensive income with the help of data collection sheets for a period of ten years period from (2007-2016) for Public owned Sugar Companies and for a period of five years from (2011 - 2015) for Private owned Sugar Companies the study was enriched with the following theories: resource dependence theory and entropy theory. The study concluded that sales/total assets ratio does not significantly influence the likelihood of bankruptcy of sugar companies in Kenya.
Alareeni, B., &Branson, J. (2013). Predicting listed companies’ failure in Jordan using Altman models: a case study, International Journal of Business and Management.
Aliakbari, S. (2009). Prediction of Corporate Bankruptcy for the UK Firms in Manufacturing Industry. A Master's Thesis, Brunel University.
Alkhatib, K., & Al Bzour, A.(2011). Predicting corporate bankruptcy of Jordanian listed companies: using Altman model. International Journal of Business and Management.
Almansour, B. (2015). Empirical model for predicting failure. American Journal of Economics, Finance and Management 1 (3), 113-124.
Altman, E. (1968). Financial Ratios Discriminant Analysis and the Prediction of Corporate Bankruptcy.
Aziz, M., & Dar, H. (2006). Predicting Corporate financial distress. Where we stand?. Corporate Governance. The International Journal of Business in Society,6 (1),18-23.
Baker, S. (2012).Capital Structure and Turnaround Strategies using Altman’s Z score model. Asian Journal of Research in Business and Management.
Barney, J., & Clark, D. (2007). Resource-Based Theory. Creating and Sustaining Competitive Advantage, Oxford University Press, New York.
Bhatt, S.N. (2012). Capital structure and turn around strategies using Altman’s z-score model. Asian Journal of Research in Business, Economics and Management, 2(7), 102-113.
Bhunia, A,. & Sarkar, R. (2011). A study of financial distress based on MDA. Journal of Management Research,3 (2),1-11.
Brettel, M., & Voss, U. (2013). Antecedents of Management control combinations-an explanation from, resource dependence theory. sbr Schmalenbach Business Review.
Brigham, F., & Daves, P. (2010).Intermediate Financial Management. Third Edition. Centage Learning.
Bryson, J., & Acermann,F., & Eden,C., (2007). Putting the Resource-Based View of strategy and Distinctive Competencies to Work in Public Organisations ‘Public Administrative Review’.
Dess, G., & Beard, D. (1984). Dimensions of organizational task environments. Administrative Science.
Fawad, H., & Lqtidar, A., & Shakir, U, & Madad, A. (2014). Can Altman Z score model predict Business failure in Pakistan? Evidence from Textile companies of Pakistan Journal of Economics and Sustainable development.
Gibson, C. (2011). Financial Reporting & Analysis. Using Financial Accounting Information. Mason, NJ. South-Western.
Hair, J., & Anderson, R., Babin, B., & Black .W. (2010). Multivariate data analysis: Aglobal perspective N.J.Pearson.
Henry, A. (2011). Understanding Strategic Management, Oxford University Press,Feb24,2011.
Hessels, J., & Terjesen,S. (2010). Resource dependency and institutional theory perspectives on direct and indirect export choices. Small Business Economics 34 (1), 203-220.
Hillman, A., & Withers, M., & Collins, B. (2009). Resource dependence theory: A review Journal of Management ,35 (6), 1404-1427.
Hu, H. (2011). A study of financial distress prediction of Chinese Growth Enterprises. University of Canberra.
Johnson. J. (2009). Health organizations: theory behavior and development, chapter 4 modern theories of organization, Jones & Bartlett Learning, ISBN 0763750530, 209,423.
Kariuki, S. (2013). An Analysis of the discriminant corporate failure prediction model of commercial banks in Kenya based on stability of financial ratios.
Kenya Sugar Board (KSB) (2010). The Kenya Sugar Industry Value Chain Analysis; Analysis of the Production and marketing Costs for Sugarcane and Sugar Products.
Kidane, H., & Wolde, M. (2004). Predicting Financial Distress in IT and service Companies in South Africa, MA Thesis, Department of Business Management university of Free State, south Africa.
Kinivo, R., & Olweny, T.(2014). Financial Performance Analysis of Kenya’s Sacco Sector Using Altman Z score model of Corporate Bankruptcy. International Journal of Business and Social Sciences, 5(9).
Klein, P., & McGahan, A., & MahoneyJ., & Pitelis, N. (2011). Resources,Capabilities,and Routines in Public Organizations, Working Papers, University of Illinois, College of Business.
Kraaijenbrink, J., & Spender, C., & Groen-Aard J., (2010). The Resource –Based view: A review and Assessment of it’s Critiques. Journal of Management, 36, (1), 349.
Maina, F., & Sakwa, M. (2012). Understanding Financial Distress among listed firms in stock exchange: A Quantitative Approach Using Z score Multi-Discriminant Financial Analysis Model. Jomo Kenyatta University of Agriculture and Technology, Nairobi, Kenya.
Mamo, M. (2011). The Prediction of Corporate Failure of commercial banks in Kenya using price adjusted Accounting data.
Mbanwie, G., & Edmond, N. (2009). Financial ratios as bankruptcy indicators: The case of financially distressed firms in Sweden rapport.
Mohammed, A., & Kim-soon, N. (2012). Using Altman’s model and current ratio to assess the financial status of companies quoted in the Malaysian Stock Exchange, IJSRP, 5 (2) 7-14.
Monti, E., & Moriano, G. (2010). A statistical Analysis to predict financial distress. Journal Service and Management,45 (2),20-25.
Natalia, O. (2007). Corporate financial distress: An empirical analysis of distress risk. University of St.Gallen, Switzerland.
Nemati, A. (2010). International Journal of Business and Management,5, (12),110-115.
Ng’ang’a, K.(2006). Failure Prediction of Insurance companies in Kenya.
Nweze A. (2011).Profit planning: A Quantitative Approach (3rd ed.). Enugu: M’Cal Communications International.
Petersen, A., & Plenborg, B. (2012). Financial Statement Analysis, 1st edition. Prentice Hall, Financial times.
Pfeffer, J., & Salancik, G. (1978). The External Control of Organizations, A Resources Dependence perspective, Harper and Row, New York.
Poghisyan, T., & Cihak, M. (2009). Distress in European Banks; An Analysis based on a new Data Set, IMF Working paper 09/9 (Washington; International Monetary Fund).
Shisia, A., & Okibo, W. (2014). An in depth analysis of the Altman’s failure prediction model on corporate financial distress in Uchumi Supermarket in Kenya. European Journal of Business Management, 6 (23),27-41.
Slotemaker, R. (2008). Prediction of Corporate Bankruptcy of private firms in the Nether lands. Erasmus University, Rotterdam. Netherlands.
Sun, J., &Li, H.(2008). Data Mining method for listed companies financial distress prediction. Knowledge Based systems, 21 (1),1-5.
Taliani, I. (2010). Predicting financial distress in commercial banks in Kenya.
Uchenna, A. & Okelue, D. (2012).Predicting Corporate Business Failure in the Nigerian Manufacturing Industry. European Journal of Business and Manageemnt,10 (4), 86-93.
Wernerfelt, B. (2011). The use of resources in Resource Acquisition Journal of management, 37, No.5, 69- 73.
Range, M. M., Njeru, A., & Waititu, G. A. (2018). Using Altman’s Z score (Sales/Total Assets) Ratio Model in Assessing Likelihood of Bankruptcy for Sugar Companies in Kenya. International Journal of Academic Research in Business and Social Sciences, 8(6).617-635.
Copyright: © 2018 The Author(s)
Published by Human Resource Management Academic Research Society (www.hrmars.com)
This article is published under the Creative Commons Attribution (CC BY 4.0) license. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this license may be seen at: http://creativecommons.org/licences/by/4.0/legalcode
