Financial failure and bankruptcy forecasting according to altman Z-score analysis: A sample application in BİST SME industry index

When a firm goes bankrupt, various economic agents are significantly affected. Firstly, the loss of employees' jobs leads to an increase in the unemployment rate and causes them to experience economic difficulties. Suppliers may not be able to collect their receivables due to the bankruptcy of the firm, and this may adversely affect their financial situation and create a domino effect in the supply chain. Customers may not be able to access the products or services they need, leading to customer dissatisfaction and loss of trust. Shareholders suffer serious financial losses due to the loss of value of their investments with the bankruptcy of the firm. The firm's inability to repay its debts is reflected negatively on the balance sheets of banks and financial institutions that provide loans, and this situation may turn into a debt crisis. Finally, the state is deprived of tax revenues; this may adversely affect the state's budget balance. These multifaceted effects show how bankruptcy affects not only the firm but also the wider ecosystem. All these factors show that the bankruptcy of a firm can have serious effects not only at the micro level but also at the macro level. Forecasting bankruptcy risk with certain methods is a very important contribution for both the firm and the parties related to the firm. In this study, the bankruptcy risks of 11 randomly selected firms in the BIST SME Industry Index are estimated for the years 2019 and 2022 according to Altman Z-Score Analysis data. Of the 11 companies, it was concluded that 9 companies started to rise financially after the pandemic according to Altman z-score analysis, the companies that lowered their z-score after the pandemic were already in the financially successful region in 2019 and continued to remain in the financially successful region in 2022 despite lowering their z-score.