Strengthening Financial Stability in Cotton Ginning Enterprises: A Stress-Testing Approach
DOI:
https://doi.org/10.51699/cajitmf.v7i2.1232Keywords:
liquidity management, financial risk, stress testing, DSCR, cotton ginning enterprises, capital structure, UzbekistanAbstract
This study examines financial stability mechanisms in cotton ginning enterprises operating in Uzbekistan using a probability-based stress-testing approach. The research is based on real financial statements and field data from two cotton ginning plants over the period 2021–2024. In addition to traditional liquidity ratios, the debt service coverage ratio (DSCR) and Monte Carlo simulation techniques are employed. Empirical findings indicate that even when the baseline DSCR ranges between 1.05 and 1.15, the probability of liquidity disruption reaches up to 42% under a combined stress scenario. This suggests that conventional current liquidity indicators fail to fully capture actual financial risks. After implementing the proposed integrated Liquidity–Risk Management Framework, the probability of financial collapse decreases to 18%. The study demonstrates that in seasonal and highly debt-dependent industries such as cotton ginning, financial stability should not be assessed solely based on static balance sheet indicators, but rather through stress resilience and probabilistic measures. The results justify setting a minimum safe DSCR threshold at 1.3 and introducing mandatory liquidity buffers for industrial enterprises.
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Copyright (c) 2026 Orif Jumayevich Murodov, Gulomov Haydarbek Ilyos ogli
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