Abstract

This paper examined the predictors of financial distress in industrial goods firms listed on the Nigerian Exchange Group between 2015 and 2024, with special attention to three major financial variables: the size of the firm, the price of shares and the growth of revenue. With the proxy of financial distress being Altman Z-score, the study utilized a panel regression analysis in a sample of 11 companies to determine the predictive ability of these variables. The results indicated that there were variabilities in how they correlate with financial distress. The most relevant predictor was share price, which showed a considerable negative correlation (coefficient = -0.058, p < 0.01). Conversely, the size of the firm was not calculated to be in statistically significant association with financial distress (coefficient = 0.064, p = 0.996). The growth in revenue showed significant marginality (coefficient = 0.004, p = 0.092), indicating that growth has the potential to belong to financial stability but the effect is rather low as compared to other variables. The model significantly explained the variation in financial distress (R2 =0.742), indicating the role of market-based indicator in predicting distress. On the basis of these results, the study suggests that industrial companies should focus more on stability of their share price by means of establishing better contact with investors and full transparent reporting as this variable showed the greatest safeguarding impact against financial distress.

Keywords: Financial distress, Altman Z-Score, Share price, Revenue growth, Firm size, Industrial Goods Firms