Firm Financial Perfomance Prior to Delisting: A Case Study of Intefresh Holdings Limited and the Zimbabwe Stock Exchange
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Date
2014-03
Journal Title
Journal ISSN
Volume Title
Publisher
International Journal of Development Research
Abstract
This paper seeks to establish whether Interfresh Holding’s financials were relevant in signalling
there being a probability of delisting prior to management’s decision at an Extra-Ordinary general
meeting. The study makes use of the published financials from as far back as 2009 up to those
published a year before the decision to delist. Key financial and performance indicators are
analysed and the trend noted and contrasted to other findings in different economic set-ups. In the
last two years of operation as a listed entity, Altman’s z-score is applied to the company’s
financials to establish whether there were any signs of distress. This is done to establish the
relevance of such findings in an environment such as Zimbabwe. Key findings suggest an
increase in interest bearing debt to total shareholders funds from 21% in 2009 to 179% in 2012.
Working capital indicators were signalling some stress as pronounced by the current and acid test
ratios. The ability of the entity to raise equity capital through a rights issue was bound to be
difficult given that the auditors in 2012 cast a slight doubt on the going concern probability. The
capital structure was found to be past the optimal levels in 2012 which hence had an implication
on the ability to raise equity through a rights offer.
Description
Full Length Research Article
Keywords
Delisting, Debt-to-equity, Altman’s z-score, Current ratio, Absolute liquid ratio, Quick ratio
Citation
Muyeche, D. Murape, C. Mungwini, N. 2014. Firm Financial Perfomance Prior to Delisting: A Case Study of Intefresh Holdings Limited and the Zimbabwe Stock Exchange. International Journal of Development Research: Vol. 4, Issue, 3; 736-740