Rescuing Business; Analysis of Bankruptcy in textile Sector of PakistanUsing LogitModel FromYear 2005-2010
Mr. Ahmed Muneeb Mehta

This study estimated a logit discriminant model for analyzing bankruptcy in textile sector of Pakistan.The model achieved a 92-percent accuracy rate in classifying the in-sample firms into bankrupt and non-bankrupt groups. A group of 37 bankrupt companies and 53 non bankrupt companies has been taken for analysis using logit model. 14 ratioshave been used to analyze data. The model suggests that firms with low earnings before interests and taxes and high total liabilities are more likely to be bankruptcy candidates. These ratios have been categories in to five groups which are Profitability,Liquidity, Leverage, Turnover Ratios and shareholder group. To reduce bankruptcy risk, textile sector should adopt a prudent growth strategy accompanied by less debt financing and tighter cost control

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