Published Online:September 2025
Product Name:The IUP Journal of Financial Risk Management
Product Type:Article
Product Code:IJFRM010925
DOI:10.71329/IUPJFRM/2025.22.3.5-23
Author Name:Aparna M S and V Kavida
Availability:YES
Subject/Domain:Finance
Download Format:PDF
Pages:5-23
This study investigates the role of both micro and macroeconomic growth drivers in financial distress among listed manufacturing firms in India from 2013 to 2023. The study adopted a two-layered analytical approach to assess internal firm capabilities and external economic conditions. Financial distress was measured using the Altman Z-Score model, applied to firm-level financial data collected from the CMIE Prowess database, along with macroeconomic indicators sourced from World Bank datasets. The findings highlight the dominance of internal growth drivers over external shocks. Microeconomic indicators like return on equity and asset turnover ratio exhibited strong positive correlation, while debt-to-equity showed a negative relationship. Conversely, current ratio showed insignificant result. Macroeconomic variables like GDP growth, inflation, interest rates, FDI inflow, and exchange rate had negligible effect. The study emphasizes the importance of internal growth drivers in reducing financial vulnerability, offering insights for policymakers and corporate decisionmakers.
Risk is inherent in the lives of individuals and the operations of corporations. While it may not always change the course of events, its influence is ever present, and it demands vigilance and careful planning.