Evaluation of Financial Ratio in Predicting Financial Health Status of Listed Manufacturing Companies in Nigeria.

In an increasingly volatile economic environment, evaluating the financial health of firms is critical for sustainable growth, informed investment decisions, and risk management. This study investigates the evaluation of financial ratios in predicting the financial health status of listed manufacturing companies in Nigeria. The research adopts a quantitative and cross-sectional design, analyzing secondary data from the audited financial statements of three purposively selected manufacturing firms over a five-year period (2019–2023). Key financial ratios liquidity, profitability, and efficiency were computed and evaluated alongside predictive financial distress models, namely the Altman Z-Score, Taffler Model, and Fulmer Model, to assess the likelihood of financial distress. The findings reveal that financial ratios, when used independently or within predictive models, provide significant insights into the financial stability of the selected firms. Liquidity and efficiency ratios were particularly useful in identifying short-term operational health, while profitability ratios aligned with longer-term performance indicators. The predictive models enhanced the reliability of the analysis by offering structured thresholds for classifying firms as financially stable or at risk. This study concludes that financial ratio analysis is a reliable tool for assessing and forecasting financial health in the Nigerian manufacturing sector. The findings hold practical implications for managers, investors, and regulators seeking to monitor corporate performance and prevent financial distress. It also contributes to literature by combining traditional ratio analysis with predictive modeling in a developing market context. Key words: Financial Ratios, Financial Health, Altman z-score, Fulmer Model, Taffler Model, Manufacturing Companies.