Financial ratios, discriminant analysis and the prediction of corporate distress
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This study develops a failure prediction model for Singaporean companies. The results show good performance with a highly correct categorization factuality rate of more than 80 percent. Two ratios were determined significant out of 64 financial ratios utilized in this analysis to discriminate among failed and non-failed companies. The significant variables are Cash flow to Sales (V02) and Days Sales in Receivable (V31).
Prediction model , Discriminant analysis , Ratio , Cash flow , Sales
Muhammd Sori, Z., & Abd Jalil, H. (2009). Financial ratios, discriminant analysis and the prediction of corporate distress. Journal of Money, Investment and Banking, (11), 5-15.