Analyzing a Listed Firm in Ghana for Early Warning Signs of Bankruptcy and Financial Statement Fraud: An Empirical Investigation of AngloGold Ashanti

This research moves beyond traditional ratio analysis to find out the possibility of bankruptcy and financial statement fraud at AngloGold Ashanti (AGA). An examination of the financial statements of the company for the years 2010 to 2012 was made with the use of Modified Altman and Beneish models. The modified Altman model is a predictor of bankruptcy. To discover the possibility of financial statement fraud, this research used the Beneish model. The examination of AGA’s financial reports with the Beneish model revealed the company was not engaged in financial statement fraud. The Altman model on the other hand, brought to the fore the financial distress the firm went through in the years under review. Keywords: Altman Z Score, Beneish M-Score, Fraud, Bankruptcy, Internal Control System

Overcoming Financial Challenges for Small and Medium Enterprises: Strategies for Entrepreneurial Success

The article discusses the challenges faced by small and medium-sized enterprises (SMEs) in obtaining finance, which is a critical issue for their growth and profitability. It highlights that SMEs often lack collateral and financial history which makes it difficult for them to obtain loans from traditional financial institutions. The article then explores two approaches to entrepreneurship, Effectuation and Bricolage, which focus on internal resourcefulness and making the most of what is available, regardless of long-term returns. The paper lists ten strategies that entrepreneurs can adopt including embracing affordability logic, engaging in networking and collaboration among others. By implementing these strategies, SMEs can overcome funding challenges and achieve sustainable growth

Capital structure, profitability, and short-term solvency of nascent SMEs in Ghana: An empirical study

PURPOSE: Small and medium enterprises (SMEs) play a vital role in the economic growth of emerging economies. However, many of these businesses fail in their early stages, making it important to investigate factors that influence their short-term solvency. This study aims to examine the impact of capital structure and profitability on the short-term solvency of nascent SMEs in Ghana, building on the liability of newness framework. METHODOLOGY: Data for this study were obtained from the Ghana Enterprises Agency, focusing on nascent SMEs that are five years old or less. Financial statements were used to measure the dependent and independent variables, and regression analysis was employed to measure the variance in short-term solvency accounted for by profitability and capital structure. FINDINGS: This study demonstrates that financing decisions and financial performance act as crucial mitigating factors for the potential risks of default and failure faced by nascent SMEs. Notably, the study finds that an appropriate balance between debt and equity financing raises the working capital ratio and thus reduces the liability of newness, which is a major challenge faced by nascent SMEs. This highlights the relevance of the trade-off theory, which recommends a combination of debt and equity financing to leverage the advantages of both sources of capital, in the context of nascent SMEs. The intricate relationship between profitability and short-term solvency in nascent SMEs was revealed in this study. The findings illustrate that while return on equity exhibits a direct impact on the short-term solvency of such SMEs, return on assets manifests an opposing effect. Furthermore, net profit after tax demonstrates only a nominal influence on the short-term solvency of nascent SMEs in Ghana. IMPLICATIONS: The implications of our study are far-reaching, particularly within the context of Ghana’s nascent SMEs. To ensure short-term viability and facilitate a smooth transition to maturity, nascent SMEs must strive for an optimal debt-to-equity ratio. This critical insight underscores the importance of managing the capital structure of nascent SMEs, as the improper balance between debt and equity may impede the achievement of short-term solvency and, in turn, hinder the long-term success of the firm. Additionally, while nascent SMEs must prioritize maintaining liquidity to safeguard against unforeseen contingencies, this comes at a high cost in terms of missed opportunities that could significantly enhance the company’s long-term return on assets. Thus, it is crucial for small business owners in Ghana to strike a balance between short-term solvency and return on assets by engaging in prudent financial management practices. Overall, our study provides valuable theoretical and practical implications for nascent SMEs in Ghana, emphasizing the need to optimize their capital structure and maximize their long-term return on assets while safeguarding their short-term liquidity. ORIGINALITY AND VALUE: The study’s conceptualization that capital structure and profitability relate significantly to short-term solvency and, therefore, buffers the liability of newness is novel. Second, by showing that the trade-off theory’s tenets are relevant to the short-term solvency of nascent SMEs, the study demonstrates that capital structure theories apply equally to SMEs, just as much as large firm

Navigating containment challenges: A quantitative study of Ghanaian SME performance during the COVID-19 pandemic

This study aims to provide valuable insights into the containment challenges faced by Ghanaian SMEs during the COVID-19 pandemic and how these challenges impacted key performance indicators (KPIs). Utilizing the partial least square approach of structural equation modelling (PLS-SEM), data collected from a sample of 152 Ghanaian SMEs are examined. The findings underscore the adverse influence of pandemic-related containment measures on financial performance, sales performance, employee satisfaction, and customer satisfaction, while revealing an increase in online engagement as SMEs adapted their business models. Thus, this study highlights the significance of bolstering dynamic capabilities, with a particular focus on digital transformation and leveraging online platforms, as a means to enhance resilience and adaptability for SMEs amidst challenging containment conditions. Theoretical implications emphasize the crucial role of dynamic capabilities in navigating uncertainty and volatility during crises, while the practical implications offer valuable guidance for small business owners in developing economies as they strive to mitigate the impacts of containment measures during public health emergencies on their businesse

IS INTERNATIONAL INVESTMENT DIVERSIFICATION PRUDENT TO EITHER THE INDIVIDUAL OR CORPORATE INVESTOR?

ABSTRACT All investments are subject to risk. What diversification does is to spread the risk across different assets1 and in the case of international diversification, across different economies operating in different countries. It does not guarantee profit or a perfect protection against the possibility of a loss and inherent risk. Aside the risks faced by domestic investors, international investors have to contend with the possibility or risk of foreign exchange uncertainties and political uncertainty