FINANCIAL DISTRESS INDICATORS OF INDIAN MANUFACTURING COMPANIES– A FACTOR ANALYSIS APPROACH
Journal Title: GJRA-Global Journal For Research Analysis - Year 2018, Vol 7, Issue 3
Abstract
Manufacturing sector is critical for any developing economy. Indian manufacturing sector, contributing to around 17% to country’s GDP is witnessing widespread distress. Many companies are reporting losses for continuous years. The Banking sector is heavily stressed due to bad loans to manufacturing sector. Insolvency proceedings are being initiated against many large companies in manufacturing sector. A distressed company adversely affects its stakeholder’s viz. investors, lenders, employees and government leading to wealth and capital erosion. In such times, it is important to capture early indicators of distress to develop measures to overcome the situation thereby preventing bankruptcy. This study seeks to examine and identify factors indicating nancial distress in listed manufacturing companies in India. Financial ratios reecting protability, solvency, efficiency and cash ows are used as variables. Factor Analysis and Logistic Regression is adopted to identify signicant variables. It is observed that efficiency in operations is a key factor inuencing a company’s protability and survival.
Authors and Affiliations
Dr. Jyoti Nair, Dr. J. K. Sachdeva
Keywords
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