REHABCO and recovery signal : a retrospective analysis

Abstract

An investigation of the REHABCO’s financial position and performance using the Altman model as a retrospective analysis is conducted. Original Altman’s cutoff points are set out to quantify a recovery signal of the ailing firms. Results indicate that, on average, those ailing firms in the REHABCO still have poor performance and financial position. There are only two companies with the Z-score greater than the higher cutoff point, that means they are, theoretically, in the safe area. However, at the end of the year 2003 the two healthier firms are still in the REHABCO . This can be interpreting that the result of the Altman model is only a guideline of the recovery investigation, and the companies still need special treatments in order to reach strong financial position and performance on continuous basis.