Prediction of Financial Distress -A Case Study of Indian Companies

Amalendu Bhunia ； Sri Islam Uddin Khan ； Somnath Mukhuti

《Asian Journal of Business Management》 3卷3期 (2011/08) Pp. 210-218

並列摘要

Financial distress is of crucial importance in financial management especially in the case of competitive environment. Failure is not an impulsive outcome and it grows constantly in stages. A spontaneous protective effort could be accommodated if the company is anticipated to be proceeding in the direction of potential bankruptcy and this can help alleviate the financial distress to all investors and decrease the costs of bankruptcy. This study extends a failure prediction model for Indian companies. This study hopes to accommodate some important results relevant to authorities and stakeholders. The capability to detect potential financial problems at a premature stage is absolutely essential because it helps to ensure business, financial, economic and political environment stability. The results show good performance with a highly correct categorization factuality rate of more than 80%. 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 and days Sales in receivable.

並列關鍵字

Discriminant analysis ； ratios ； cash flow ； Indian companies ； sales