Financial Stability as a Catalyst for Sustainable Growth in Nigerian Oil and Gas Companies: A Z-Score Analysis

Abstract

This study investigates the role of financial stability in fostering sustainable growth in Nigerian oil and gas companies. The study gathered secondary data from the financial records of listed Nigerian oil and gas businesses from 2014 to 2023 using the Altman Z-Score model. A sample of seven (7) oil and gas businesses was selected using a purposive sampling technique. For data estimate, Altman Z-Score analysis, regression analysis, principal factor analysis, and correlation tests were used. The Z-score analysis's findings show that the sampled companies have a modest level of financial stability; their mean Z-score of 4.43 suggests that they are not in imminent danger of going bankrupt. The findings also show that the main factors influencing these companies' financial stability are profitability, growth in retained earnings, and working capital management. Based on the Z-scores, the study came to the conclusion that Nigerian oil and gas companies are financially stable. The Z-score model was verified in this study as a useful instrument for assessing the financial stability of businesses. The study determines how the components of the Z-score model affect the financial stability of oil and gas firms in Nigeria. According to the report, in order to maintain financial stability and increase liquidity, oil and gas businesses' management should give priority to effective working capital management techniques.