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Financial Distress Analysis of Technology Companies using Grover Model
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1  Department of Physical and Mathematical Science, Faculty of Science, Universiti Tunku Abdul Rahman, Kampar Campus, Jalan Universiti, Bandar Barat, 31900 Kampar, Perak, Malaysia
Academic Editor: Massimiliano Ferrara

Abstract:

The decision making process is of utmost importance since it dictates what will be chosen. Good decision making may lead to an ideal result that decision maker wishes to achieve. Decision making process is highly essential for the organization and investors to go through before making decisions. Proper and thorough planning can help the investors to make a good decision and hence, they are able to gain profits. As a result, it is important to conduct a financial distress analysis on the companies in order to understand their financial condition. In this study, the financial performance of the technology companies is assessed by Grover model. Financial ratios such as working capital to total asset, earnings before interest and taxes to total asset, and net income to total asset are analyzed in this study with Grover model. Each of the companies will obtain a G-score based on their financial performance. Grover model is capable to categorize the companies either into safe, grey or distress zones. The findings of this paper depict that 28 companies are financially sound. It indicates that these companies are performing well in terms of financial performance. Therefore, this provides insights to the investors to identify the companies with good financial performance for investment. Besides, the identified companies in safe zone can serve as a reference to other companies for benchmarking.

Keywords: Grovel model; financial distress; financial ratios; technology companies
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