Comparison Of Financial Distress Prediction Models: A Literature Review Of Altman, Springate, Zmijewski, Grover, Ohlson, Dan Zavgren

Abstract

Financial distress is a condition that shows a company's financial pressure and can be an early indication of financial difficulties. This study aims to review and compare the characteristics and findings of previous research on the Altman, Springate, Zmijewski, Grover, Ohlson, and Zavgren models in predicting financial distress. The research uses a descriptive approach with a literature review method. Data are in the form of secondary sources, especially relevant scientific articles and previous research. The analysis was carried out in a descriptive-comparative manner by comparing the characteristics of the model, financial indicators, and prediction results reported in previous studies. The results of the study showed that the six models had different variables and approaches in identifying financial distress. Previous research also showed that there were differences in prediction results between models related to industry characteristics, observation periods, company conditions, variables used, and financial distress criteria. Therefore, the use of prediction models needs to be adjusted to the characteristics of the object and the research context and supported by other financial analyses. This study provides an overview of the use of various prediction models as early warning instruments in identifying the company's financial condition.