Data Analytics: An Integrated Financial Analysis Framework to Measure the Financial Health of Pakistan Defense Acquisition Contractors

Abstract

With the sixth-largest military in the world, the Pakistani armed services need a consistent and reliable supply of defense stores. The Ministry of Defense invests billions of Pakistani rupees for acquisition and procurement. Yet, the substandard deliveries and contractor default lead to inefficient use of financial resources and restrict the warfighter’s capabilities. To reduce the possibility of awarding contracts to inefficient contractors, defense acquisition contracting officers may need to perform the contractor’s financial health assessment. This study reveals that the financial health assessment framework as a compendium of existing policies and procedures is missing. The research compiles widely used financial analytic tools as an Integrated Financial Analysis Framework to assist Pakistani defense acquisition contracting officers in the financial health assessment of potential contractors. The developed framework is applied to sampled publicly traded companies from the Pakistan textile industry to evaluate their financial health.