INSOLVENCY RISK AND FINANCIAL RATIOS ANALYSIS IN PRIVATE EQUITY-OWNED COMPANIES: EVIDENCE FROM JOANN COMPANY.

Olimjonova Munisa Nuriddin qizi

Authors

Olimjonova Munisa Nuriddin qizi Tashkent State University of Economics Accounting faculty student

Keywords:

Private equity, insolvency, bankruptcy, leverage ratios, LBO, JOANN Inc., investment returns, margins, Altman Z-score, Piotroski F-score, financial metrics, cash flow.

Abstract

This research paper examines the complex relationship between private equity (PE) investments and insolvency risk, particularly in the context of highly leveraged firms. With PE deal-making reaching approximately $2 trillion globally in 2024, an increase of 14% from the previous year, the economic impact of PE-backed firms is undeniable. However, these firms are also prone to insolvency risks due to their leveraged capital structures and rising bankruptcy filings, especially following the COVID-19 pandemic, highlight the insolvency risks associated with high debt levels inherent in PE acquisitions. The financial structure and metrics of PE-backed firms are investigated, focusing on the case of JOANN Company. While PE can offer substantial returns, it does have a need for monitoring of operations.

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Data obtained from https://stockanalysis.com/stocks/joanq/

Altman Z-Score, Joann (Joanq) Inc. https://www.gurufocus.com/term/zscore/JOANQ

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