American Journal of Economics, Finance and Management
Articles Information
American Journal of Economics, Finance and Management, Vol.1, No.3, Jun. 2015, Pub. Date: Apr. 22, 2015
Empirical Model for Predicting Financial Failure
Pages: 113-124 Views: 3733 Downloads: 6655
Authors
[01] Bashar Yaser Almansour, Finance and Economic Department, College of Business, Taibah University, Al-Madina Al-Monawara, Saudi Arabia.
Abstract
From year to year, strong attention has been paid to the study of the problems of predicting firms’ bankruptcy. Bankruptcy prediction is an essential issue in finance especially in emerging economics. Predicting future financial situations of individual corporate entities is even more significant. Regression analysis is used to develop a prediction model on 22 bankrupt and non-bankrupt Jordanian public listed companies for the period 2000 until 2003. The results show that working capital to total assets, current asset to current liabilities, market value of equity to book value of debt, retained earnings to total asset, and sales to total asset are significant and good indicators of the probability of bankruptcy in Jordan.
Keywords
Financial Ratios, Multiple Discriminat Analysis, Bankruptcy, Credit Risk
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