Impact of the COVID-19 on the Textile Industry of Bangladesh: Is there an Ensuing Disaster?

Abstract

Purpose: The purpose of this study is to determine the financial health of the selected listed companies in the textile industry of Bangladesh during the first fiscal year of the COVID-19 pandemic. Methodology: Financial health of 30 listed companies in the textile industry of Bangladesh has been determined through a popular bankruptcy model named the Altman Z Score model. The impact of a few variables of this model has also been further analyzed. Findings: The study reveals that the financial health of the 30 companies deteriorated during the COVID year (2019-2020) than it was in the previous 3 fiscal years. Furthermore, to understand the changes in the factors related to the calculation of the Z-score we have analyzed Net Sales, EBIT, Current Assets, Current Liabilities, Net Working Capital, Non Current Assets, Non-Current Liabilities, Retained Earnings, Total Liabilities, Debt to Asset Ratio, Total Asset & Market Value of the 30 sample firms across the FY 2016/17 to FY 2019/20, the result of which also shows the evidence of diminishing financial health of the companies during the COVID Year (2019-2020). Practical Implications: The findings of this study can be useful for the investors to make investment decisions, for the managers and analysts to identify the significant variable for financial growth, and for other stakeholders to comprehend the financial health of the textile industry of Bangladesh. Originality: No other contemporary study has used the Altman Z Score and analyzed the variables of the model further to determine the impact of COVID-19 on the financial health of the textile industry of Bangladesh. This study provides detailed quantitative results from the statistical analysis such as the T-test as well as the implication of the Altman Z Score Model. Limitations: This study has used a quantitative model to measure the impact of COVID-19 on the textile industry of Bangladesh hence there are further scopes to explore the impact of the pandemic through analyzing a few qualitative aspects such as Government policies, Customer Behaviour, etc.