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Monitoring financial health of contractors at the aftermath of the Asian economic turmoil: a case study in Hong Kong

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Listed:
  • John Chan
  • C. M. Tam
  • R. Cheung

Abstract

The whole construction industry (contractors, consultants and suppliers) is suffering from business shrinking under the prevailing deflationary economy in Hong Kong. Local contractors are facing tremendous financial problems. The financial situation of a typical local contractor has been analysed for the years since 1997 - the Asian Economic Crisis. By using the financial ratios together with one of Altman's distress models, it is possible to monitor and assess the financial health of contractors. Based on the results of the case study, the financial health of the contractor under study is found satisfactory. In addition to this quantitative analysis, it is advisable for local contractors to conduct a strategic review for their construction industry and their business environment so as to improve their financial performance in both the near future and longer term.

Suggested Citation

  • John Chan & C. M. Tam & R. Cheung, 2005. "Monitoring financial health of contractors at the aftermath of the Asian economic turmoil: a case study in Hong Kong," Construction Management and Economics, Taylor & Francis Journals, vol. 23(5), pages 451-458.
    • Handle: RePEc:taf:conmgt:v:23:y:2005:i:5:p:451-458
    DOI: 10.1080/0144619042000190207
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    References listed on IDEAS

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    1. Edward I. Altman, 1968. "The Prediction Of Corporate Bankruptcy: A Discriminant Analysis," Journal of Finance, American Finance Association, vol. 23(1), pages 193-194, March.
    2. Beaver, Wh, 1966. "Financial Ratios As Predictors Of Failure," Journal of Accounting Research, Wiley Blackwell, vol. 4, pages 71-111.
    3. Edward I. Altman, 1968. "Financial Ratios, Discriminant Analysis And The Prediction Of Corporate Bankruptcy," Journal of Finance, American Finance Association, vol. 23(4), pages 589-609, September.
    Full references (including those not matched with items on IDEAS)

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