Financial Ratio Selection for Distress Classification

2011 ◽  
pp. 503-508
Author(s):  
Roberto Kawakami Harrop Galvao ◽  
Victor M. Becerra ◽  
Magda Abou-Seada
Keyword(s):  
Discriminant Analysis ◽  
Financial Distress ◽  
Prediction Models ◽  
Financial Ratios ◽  
Financial Ratio ◽  
Seminal Work ◽  
Selection For

Prediction of corporate financial distress is a subject that has attracted the interest of many researchers in finance. The development of prediction models for financial distress started with the seminal work by Altman (1968), who used discriminant analysis. Such a technique is aimed at classifying a firm as bankrupt or nonbankrupt on the basis of the joint information conveyed by several financial ratios.

Building a Hybrid Prediction Model to Evaluation of Financial Distress Corporate

2014 ◽  
Vol 651-653 ◽  
pp. 1543-1546
Author(s):  
You Shyang Chen
Keyword(s):  
Financial Distress ◽  
Prediction Models ◽  
Early Warning Systems ◽  
Financial Ratios ◽  
Soft Computing Techniques ◽  
Distress Prediction ◽  
Managerial Implications ◽  
Planning Processes ◽  
Potential Alternative ◽  
Application Fields

Exploring financial distress activity within a listed target of stock markets focused on creating such prediction models can provide insight into the technological requirements of corporate and the demands placed upon a stock investor in this field. This study integrates professional knowledge to financial ratios into the emerging soft computing techniques for building up a hybrid corporate distress prediction of early warning systems in regarding application fields. Conclusively, the empirical results indicate that the proposed procedure is a great potential alternative of helpful hybrid models to demonstrate its technological merit and application value, and it has increasing the application filings. In terms of managerial implications, the analysis results may be relevant to other types of prediction models seeking to identify financial ratios for the planning processes.

scholarly journals Analisis Diskriminan Untuk Memprediksi Kebangkrutan Perusahaan: Studi Kasus Pada Perusahaan Sektor Textile Dan Garment Di Bursa Efek Indonesia 2016-2018

2021 ◽  
Vol 5 (1) ◽  
pp. 132-140
Author(s):  
Deny Ismanto ◽  
Dyah Ernawati
Keyword(s):  
Discriminant Analysis ◽  
Data Collection ◽  
Discriminant Function ◽  
Financial Distress ◽  
Sampling Technique ◽  
Quantitative Approach ◽  
Financial Ratios ◽  
Collection Method ◽  
Purposive Sampling ◽  
Financial Difficulties

Failure to make a continuous profit will hamper the company's development and this can lead to bankruptcy. Bankruptcy is usually marked by financial distress. Companies that are not able to overcome financial difficulties and problems are getting protracted, then the company will go bankrupt. One way to predict bankruptcy is by using discriminant analysis. This type of research is descriptive with a quantitative approach. The data collection method used is documentation. The population in this study were Textile & Garment companies listed on the IDX in 2016-2018. The sampling technique was purposive sampling and obtained a sample of 8 companies with a potential bankruptcy and 10 companies for 3 years of observation. The results showed that of the 2 financial ratios used Quick Ratio (QR) and Return On Asset (ROA), only the Quick Ratio (QR) ratio proved significant to be able to distinguish bankrupt and non-bankrupt companies. By using discriminant analysis. The dominant variable informing the discriminant function is the Quick Ratio (QR).

scholarly journals A Review of Financial Distress Prediction Models: Logistic Regression and Multivariate Discriminant Analysis

2017 ◽  
Vol 1 (3) ◽  
pp. 13-23
Author(s):  
Ehsan ul Hassan ◽  
Zaemah Zainuddin ◽  
Sabariah Nordin
Keyword(s):  
Discriminant Analysis ◽  
Financial Distress ◽  
Prediction Models ◽  
Early Prediction ◽  
Multivariate Discriminant Analysis ◽  
Advantages And Disadvantages ◽  
Financial Distress Prediction ◽  
Distress Prediction ◽  
Precautionary Measures ◽  
Multivariate Discriminant

In corporate finance, the early prediction of financial distress is considered more important as another occurrence of business risks. The study presents a review of literature for early prediction of financial bankruptcy. It contributes to the formation of a systematic review of the literature regarding previous studies done in the field of bankruptcy. It addresses two most commonly used financial distress prediction models, i.e. multivariate discriminant analysis and logit. Models are discussed with their advantages and disadvantages. After methodological review, it seems that logit regression model (LRM) is more advantageous than multivariate discriminant analysis (MDA) for better prediction of financial bankruptcy. However, accurate prediction of bankruptcy is beneficial to improve the regulation of companies, to form policies for companies and to take any precautionary measures if any crisis is about to come in future.

scholarly journals ANALYSIS OF THE EFFECT OF FINANCIAL RATIO ON FINANCIAL DISTRESS CONDITIONS IN MANUFACTURING COMPANIES LISTED IN INDONESIA STOCK EXCHANGE

2021 ◽  
Vol 5 (2) ◽  
pp. 105-120
Author(s):  
Normiati Normiati ◽  
Diah Amalia
Keyword(s):  
Financial Distress ◽  
Stock Exchange ◽  
Sampling Technique ◽  
Financial Ratios ◽  
Manufacturing Companies ◽  
Financial Health ◽  
Analysis Model ◽  
Return On Assets ◽  
Financial Ratio ◽  
Leverage Ratio

This study aims to analyze any indicators in financial ratios that affect financial distress conditions. The data used are data on manufacturing companies in the Indonesia Stock Exchange (IDX) in 2012-2017, which are as many as 80 samples. Dependent financial distress variables are measured using the Altman analysis model (Z-Score). Independent variables are measured using the financial ratios indicator. This study uses a non-probability sampling technique that is purposive sampling. The data used is panel data, using Eviews 9. The results of this study show that the liquidity ratio measured by the current ratio and the leverage ratio measured by the debt asset ratio affect the condition of financial distress. While the profitability ratio measured by return on assets and sales growth does not affect the financial ratio. This research contributes to investors who can use this model, by including the financial ratios indicator, to assess the financial health of the company before making investment-related decisions.

scholarly journals RASIO KEUANGAN DAN PREDIKSI FINANCIAL DISTRESS

2019 ◽  
Vol 2 (2) ◽  
Author(s):  
Jenny Pratiwi Assaji ◽  
Zaky Machmuddah
Keyword(s):  
Financial Distress ◽  
Sampling Method ◽  
Stock Exchange ◽  
Financial Ratios ◽  
Return On Assets ◽  
Financial Ratio ◽  
Net Profit ◽  
Return On Capital ◽  
Logistic Regression Method ◽  
Asset Turnover

The purpose of this research is to understand the effect of financial ratios in predicting the possibility of financial distress on companies listed on Sri Kehati index in a row of 2009-2016. This study uses the financial ratios proxied by return on assets, return on capital, net profit margin, P / E ratio, and asset turnover as independent variables. Meanwhile, the financial distress proxied by Z-score is a dependent variable. The population of this study is all companies listed on the index of Sri Kehati in 2009-2016 and listed on the Indonesia Stock Exchange. The sample of this study took nine companies with purposive sampling method and the study period is for eight years in a row (2009-2016). Logistic regression method used in this research. The results show that ROA, ROE and PER have a significant effect on financial distress. Meanwhile, NPM and ATO have no significant effect on financial distress.Keywords: Financial Ratio;Financial Distress

scholarly journals Zastosowanie metod wielowymiarowej analizy dyskryminacyjnej do prognozowania upadłości wybranych spółek sektora spożywczego

2016 ◽  
pp. 117-129
Author(s):  
Monika Zielińska-Sitkiewicz
Keyword(s):  
Discriminant Analysis ◽  
Food Industry ◽  
Prediction Models ◽  
Stock Exchange ◽  
Free Market ◽  
Calculation Model ◽  
Financial Ratios ◽  
Warsaw Stock Exchange ◽  
Last Stage ◽  
Multivariate Discriminant

On the free market, the companies should quickly and flexibly react to changes and perturbations in the unstable economy. Entities, which are not able to keep up with the changes, enter the path of crisis, whose last stage may be bankruptcy. The paper attempts to use and evaluate three of Polish models of the multivariate discriminant analysis and the most sensitive financial ratios proposed in the prediction models by P. Antonowicz (2007) in forecasting the risk of bankruptcy. The analysis was conducted for the years 2008–2014. 15 food industry companies, listed on the main market of the Warsaw Stock Exchange and preparing profit and loss account with the use of the calculation model, were analysed.

scholarly journals Pemodelan Multiple Discriminant Analysis untuk Memprediksi Financial Distress Bank Umum Syariah di Indonesia

2020 ◽  
Vol 12 (1) ◽  
pp. 31-42
Author(s):  
Radia - Purbayati
Keyword(s):  
Discriminant Analysis ◽  
Prediction Model ◽  
Financial Distress ◽  
Financial Ratios ◽  
Islamic Banks ◽  
Multiple Discriminant Analysis ◽  
Islamic Bank ◽  
Financial Distress Prediction ◽  
Distress Prediction

The aims of this study is to set financial distress prediction model and to identify the best accuraction and classification from the financial distress prediction model. The objects were 9 Islamic Banks in Indonesia since 2012 to 2017 using Multiple Discriminant Analysis modelling. The variables used financial ratios, consist of ROA, BOPO, Current Assets to Current Liabilities Ratio, NPF, Equity to Total Liabilities, and FDR. The outcome shows that a variable tend to cause an Islamic bank fall into financial distress condition dominantly was NPF ratio. The accuration prediction power with 42 from 42 obervations predicted fall into health bank category were classified correctly (100%), and 2 from 12 Islamic Banks fall into financial distress category were classified incorrectly (16.7%) and were corrected into helath bank category. The classification power created by multiple discriminant analysis was 81.48%.  

scholarly journals Pengaruh Kecukupan Modal (CAR), Pengelolaan Kredit (NPL), dan Likuiditas Bank (LDR) Terhadap Probabilitas Kebangkrutan Bank (Studi pada Bank Umum Swasta Devisa yang tercatat di BEI tahun 2009 – 2013)

2015 ◽  
Vol 12 (1) ◽  
pp. 38-50
Author(s):  
Lina Nur Hidayati
Keyword(s):  
Empirical Evidence ◽  
Financial Distress ◽  
Sampling Method ◽  
Capital Adequacy ◽  
Financial Ratios ◽  
Financial Ratio ◽  
Purposive Sampling ◽  
Research Hypothesis ◽  
Capital Adequacy Ratio ◽  
Research Show

The purpose of this research is to provide empirical evidence about using bank financial ratio to predict bank bankruptcy. The variables which used are seven financial ratios, CAR (capital adequacy ratio), NPL (non performing loan), and LDR (loan to deposit ratio). The statistic methods which is used to test on the research hypothesis is logit regression.The sample of this research was extracted using purposive sampling method, comprising 7 banks taken from BEI for the period of 2009, 2010, 2011, 2012, 2013. From sample, there are 7 banks, consist of 4 nontrouble banks and 3 trouble banks. The resulst of this research show that CAR and NPL, have no significant effect on probability of banks’s financial distress. LDR have significant influences on probability of banks’s financial distress.Keywords : 

scholarly journals Financial Ratio Analysis to Predict Financial Distress on Property and Real Estate Company listed in Indonesia Stock Exchange

2019 ◽  
Vol 2 (2) ◽  
pp. 125
Author(s):  
Imas Nurani Islami ◽  
William Rio
Keyword(s):  
Real Estate ◽  
Financial Distress ◽  
Stock Exchange ◽  
Financial Ratios ◽  
Debt Ratio ◽  
Current Ratio ◽  
Return On Equity ◽  
Financial Ratio ◽  
Foreign Companies ◽  
Equity Ratio

This study aims to prove the ability of financial ratios in measuring financial distress. As is known that the start of the number of new companies that compete in order to achieve corporate goals, even more national companies that want to compete with foreign companies. On this basis, researchers attempt to prove the probability of occurring financial distress by using several financial ratios, especially large companies such as property and real estate firms. The financial ratios used in this study are current ratio, debt ratio, return on equity ratio, and capitalization ratio. With the type of research that is quantitative, the population that has been used in this study are property and real estate companies listed on the Indonesia Stock Exchange period 2012-2016. -. The sample obtained is a company that continuously publish its financial report within five years. According to the results of research that has been done, the ratio is able to measure the possibility of financial distress in property companies and real estate is the current ratio, debt ratio, and return on equity ratio. While the ratio is not able to measure the likelihood of occurrence of financial distress is capitalization ratio.

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