Download or read book Predicting Default of a Small Business Using Different Definitions of Financial Distress written by Shimin Lin and published by . This book was released on 2007 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Financial Statement Analysis and the Prediction of Financial Distress written by William H. Beaver and published by Now Publishers Inc. This book was released on 2011 with total page 89 pages. Available in PDF, EPUB and Kindle. Book excerpt: Financial Statement Analysis and the Prediction of Financial Distress discusses the evolution of three main streams within the financial distress prediction literature: the set of dependent and explanatory variables used, the statistical methods of estimation, and the modeling of financial distress. Section 1 discusses concepts of financial distress. Section 2 discusses theories regarding the use of financial ratios as predictors of financial distress. Section 3 contains a brief review of the literature. Section 4 discusses the use of market price-based models of financial distress. Section 5 develops the statistical methods for empirical estimation of the probability of financial distress. Section 6 discusses the major empirical findings with respect to prediction of financial distress. Section 7 briefly summarizes some of the more relevant literature with respect to bond ratings. Section 8 presents some suggestions for future research and Section 9 presents concluding remarks.

Download or read book Corporate Financial Distress written by Edward I. Altman and published by . This book was released on 1983-02-14 with total page 408 pages. Available in PDF, EPUB and Kindle. Book excerpt: "A Wiley-Interscience publication."Includes index. Bibliography: p. 355-361.

Download or read book Explaining and Predicting Financial Distress Using Financial Ratios written by Gilbert Mbanwie and published by LAP Lambert Academic Publishing. This book was released on 2011-06 with total page 64 pages. Available in PDF, EPUB and Kindle. Book excerpt: Financial distress and corporate bankruptcy has been a common occurrence back into the century and of late has witnessed a multiplier effect in the global market. Firms are running short of cash flows to meet up not only with debt financing, but also with the cost of daily operations. This study examine financial ratios using financial reports of groups of Swedish bankrupt and active companies for the period 1996 to 2003 with aim to determine most significant and reliable ratios for predicting bankruptcy. Cross sectional analysis is used to compare matched pair financial ratios and to explain the association between the explanatory variables and business failure. The study adopts both objectivism and interpretivism research approaches therefore provides findings that differ from those of "pure" mainstream research. It explains financial distress from an academic and professional perspective making it useful to researchers and business managers. The book is ideal for final year undergraduate and graduate students taking courses in accounting, finance, business and economics.

Download or read book Predicting Default Probability Using Delinquency written by Asma Marouani and published by . This book was released on 2014 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt: Small businesses may be expected to be more likely to fail because they are more volatile, have less power in negotiations with financial and social partners, are more credit-rationed by credit managers, are less likely to benefit from their experience or 'learning effects', compared to large firms, and often operate in small markets. From this point of view, financial ratios seem to be irrelevant when modelling their default probabilities. This current research is an attempt to fine tune variables and to find more dynamic information to include in a point-in-time probability of default model.In this paper we explore the hypothesis that a firm's future default could be measured and explained solely by the historical data on the ability and willingness of a firm to pay its creditors. We use a credit scoring application to model default on a large data set of French Small and Medium-sized Enterprises (SMEs). We find that payment behavior data can be used to successfully predict SME bankruptcy in France and in a timely manner. New variables on late payment and delinquency are identified as alternatives to those usually used in failure models literature.

Download or read book Accounting and Information Theory written by Baruch Lev and published by . This book was released on 1969 with total page 106 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Statistical Techniques for Bankruptcy Prediction written by Volodymyr Perederiy and published by GRIN Verlag. This book was released on 2015-05-22 with total page 106 pages. Available in PDF, EPUB and Kindle. Book excerpt: Master's Thesis from the year 2005 in the subject Business economics - Accounting and Taxes, grade: 1,0, European University Viadrina Frankfurt (Oder), course: International Business Administration, language: English, abstract: Bankruptcy prediction has become during the past 3 decades a matter of ever rising academic interest and intensive research. This is due to the academic appeal of the problem, combined with its importance in practical applications. The practical importance of bankruptcy prediction models grew recently even more, with “Basle-II” regulations, which were elaborated by Basle Committee on Banking Supervision to enhance the stability of international financial system. These regulations oblige financial institutions and banks to estimate the probability of default of their obligors. There exist some fundamental economic theory to base bankruptcy prediction models on, but this typically relies on stock market prices of companies under consideration. These prices are, however, only available for large public listed companies. Models for private firms are therefore empirical in their nature and have to rely on rigorous statistical analysis of all available information for such firms. In 95% of cases, this information is limited to accounting information from the financial statements. Large databases of financial statements (e.g. Compustat in the USA) are maintained and often available for research purposes. Accounting information is particularly important for bankruptcy prediction models in emerging markets. This is because the capital markets in these countries are often underdeveloped and illiquid and don’t deliver sufficient stock market data, even for public/listed companies, for structural models to be applied. The accounting information is normally summarized in so-called financial ratios. Such ratios (e.g. leverage ratio, calculated as Debt to Total Assets of a company) have a long tradition in accounting analysis. Many of these ratios are believed to reflect the financial health of a company and to be related to the bankruptcy. However, these beliefs are often very vague (e.g. leverages above 70% might provoke a bankruptcy) and subjective. Quantitative bankruptcy prediction models objectify these beliefs in that they apply statistical techniques to the accounting data. [...]

Download or read book Measuring the health of Italian SMEs with insolvency prediction models Z ScoreM and D Score written by Olga Maria Stefania Cucaro and published by Olga Maria stefania Cucaro. This book was released on 2017-08-29 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: Measuring the "health" of Italian SMEs with insolvency prediction models Z '-ScoreM and D-Score. This book comes from the study of probability of Default began in 2007 and that continues to this day. In particular, this analysis is taken up with the study of the Rating and credit and liquidity risk during the PhD. the main objective will be to locate a model based on trusted variables for locating the State of health and level of risk of SMEs. Several studies have analyzed the probability of failure of large companies, listed companies or emerging markets, other studies have attempted to create a useful dashboard to the analysis of core indicators to be kept under observation, but still did not create a quantitative indicator of business health suited to Italian SMEs.

Download or read book Powering the Digital Economy Opportunities and Risks of Artificial Intelligence in Finance written by El Bachir Boukherouaa and published by International Monetary Fund. This book was released on 2021-10-22 with total page 35 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper discusses the impact of the rapid adoption of artificial intelligence (AI) and machine learning (ML) in the financial sector. It highlights the benefits these technologies bring in terms of financial deepening and efficiency, while raising concerns about its potential in widening the digital divide between advanced and developing economies. The paper advances the discussion on the impact of this technology by distilling and categorizing the unique risks that it could pose to the integrity and stability of the financial system, policy challenges, and potential regulatory approaches. The evolving nature of this technology and its application in finance means that the full extent of its strengths and weaknesses is yet to be fully understood. Given the risk of unexpected pitfalls, countries will need to strengthen prudential oversight.

Download or read book DEA and Logit Models for Predicting Corporate Financial Distress written by Maryam Sheikhi and published by LAP Lambert Academic Publishing. This book was released on 2012-06 with total page 140 pages. Available in PDF, EPUB and Kindle. Book excerpt: The financial ratios coming out of financial statements can reflect some of the characteristics of companies in different aspects, but generally, it has been proved that weak management is the main cause of financial distress. So, the distress of companies can be the reflection of its management condition. Consequently the distress score of companies should be considered as a new variable in prediction of financial distress model. Among the methods applied to compare the efficiency of different statistic models, the ROC curves analysis are often used in the fields of psychology and bio-physics to measure a diagnosis test and to compare the performance of various models for two-category results. Therefore, concerning the topic of this research and the use of ROC curves in predicting the financial distress of corporations, current research aims at designing Logit model using the distress score of the corporations and investigates the predictability of this new variable. Also, a model based on the DEA is designed and finally for better analyzing the results are compared with the Logit models.

Download or read book Corporate Financial Distress and Bankruptcy written by Edward I. Altman and published by John Wiley & Sons. This book was released on 2010-03-11 with total page 314 pages. Available in PDF, EPUB and Kindle. Book excerpt: A comprehensive look at the enormous growth and evolution of distressed debt, corporate bankruptcy, and credit risk default This Third Edition of the most authoritative finance book on the topic updates and expands its discussion of corporate distress and bankruptcy, as well as the related markets dealing with high-yield and distressed debt, and offers state-of-the-art analysis and research on the costs of bankruptcy, credit default prediction, the post-emergence period performance of bankrupt firms, and more.

Download or read book A Three tier Approach to Determine Financial Distress of Companies Listed on the Johannesburg Stock Exchange written by Sibusiso Wellington Sabela and published by . This book was released on 2016 with total page 205 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study presents a three-tiered approach to determine financial distress in companies listed on the Johannesburg Stock Exchange. The objective of this unique approach is to contribute to the existing knowledge base in the study of financial distress prediction. The three-tiered approach sees the development of a: (i) basic model, (ii) Merton model, and (iii) hybrid model. The basic model is further split in three phases. In the first phase the model is based on fundamental data; the second phase adds market variables; and the third phase adds macroeconomic indicators. The first phase points to various company specific ratios, the second phase points to various market based ratios and the third phase points to external economic indicators. Pioneered by Merton (1974:449), the Merton model is a structural model with its framework adopted from the Black-Scholes option pricing methodology. Therefore, the hybrid model is a combination of the basic and Merton models. This study explores the effectiveness of a hybrid model, in which both the fundamental and market data are used as input variables. This combination is intended to enhance the predictive power of a company's default event, given that both variables convey company-specific credit risk information that is not considered by the other. In developing the basic model, this study focuses on exploring a multinomial approach where companies are categorised in three groups: distressed, depressed and healthy. This is in line with the thinking that failure does not affect companies immediately, but is rather a process. Healthy companies go through a depression phase before they actually fail. The statistical technique of choice for the basic and hybrid models is the multinomial logistic regression. This technique is chosen on its strength over alternatives like multi-discriminant analysis, with the nature of data being the driving force. Certain statistical tests were performed on the data, like the Kolmogorov-Smirnov and Shapiro-Wilk statistical tests of data normality. The sample of companies used in the present study is categorised as follows; 8% distressed, 14% depressed, and 78% healthy. Given that the percentage number of companies in each category is not equal, the statistical integrity of multi-discriminant analysis would be grossly compromised. The Merton model is based on the formula as derived by its pioneer. This mathematical formula uses five estimated variables: asset value, asset volatility, debt level, risk-free rate, and time. The fundamental assumption of structural models is that there is a cause-effect, economically motivated reason why firms default. Default is highly likely to occur when the market value of a firm's assets is insufficient to cover its liabilities in the future. This balance sheet approach to measuring risk means that the market-based models share common ground with fundamental models in credit analysis. However, a major advantage of market-based models over the fundamental approach is that they provide both timely warning of changes in credit risk and an up-to-date view of a firm's value. This view is given on the basis that market prices are indicative of future cash flows of the business. The most important motivation to study both these models and further develop a hybrid model within the South African market is the lack of such academic research in the local academic domain. Therefore, this uniquely positions the study where the distress probability is studied by applying both fundamental and market data. This study also aims to investigate which of the two models is better at differentiating defaulting and non-defaulting firms. In this way, the study assesses the extent to which different failure prediction models may yield significantly different rankings for the same firm. Furthermore, the study explores the extent of gains (if any) that can be realised by combining the two models' predictions. The present study is based on information sourced from the Johannesburg Stock Exchange, INET BFA, South African Reserve Bank and other relevant academic material. To be included in the sample, firms are required to have a minimum listing period of at least 24 months to ensure that the firm's market price reflects the market's collective opinion of the prospect of its business. For purposes of the fundamental data, companies are required to have existed for at least five years to be included in sample. The economic period under review in this study is 2005-2014. The 2014 cut-off is set to ensure the availability of financial statements. The study has a sample size of 100 companies, consisting of eight distressed, 14 classified as depressed, and 78 healthy.

Download or read book Probabilistic Methods for Financial and Marketing Informatics written by Richard E. Neapolitan and published by Elsevier. This book was released on 2010-07-26 with total page 427 pages. Available in PDF, EPUB and Kindle. Book excerpt: Probabilistic Methods for Financial and Marketing Informatics aims to provide students with insights and a guide explaining how to apply probabilistic reasoning to business problems. Rather than dwelling on rigor, algorithms, and proofs of theorems, the authors concentrate on showing examples and using the software package Netica to represent and solve problems. The book contains unique coverage of probabilistic reasoning topics applied to business problems, including marketing, banking, operations management, and finance. It shares insights about when and why probabilistic methods can and cannot be used effectively. This book is recommended for all R&D professionals and students who are involved with industrial informatics, that is, applying the methodologies of computer science and engineering to business or industry information. This includes computer science and other professionals in the data management and data mining field whose interests are business and marketing information in general, and who want to apply AI and probabilistic methods to their problems in order to better predict how well a product or service will do in a particular market, for instance. Typical fields where this technology is used are in advertising, venture capital decision making, operational risk measurement in any industry, credit scoring, and investment science. - Unique coverage of probabilistic reasoning topics applied to business problems, including marketing, banking, operations management, and finance - Shares insights about when and why probabilistic methods can and cannot be used effectively - Complete review of Bayesian networks and probabilistic methods for those IT professionals new to informatics.

Download or read book International Convergence of Capital Measurement and Capital Standards written by and published by Lulu.com. This book was released on 2004 with total page 294 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Trade Credit and Bank Credit written by Inessa Love and published by World Bank Publications. This book was released on 2005 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt: "The authors study the effect of financial crises on trade credit in a sample of 890 firms in six emerging economies. They find that although provision of trade credit increases right after the crisis, it consequently collapses in the following months and years. The authors observe that firms with weaker financial position (for example, high pre-crisis level of short-term debt and low cash stocks and cash flows) are more likely to reduce trade credit provided to their customers. This suggests that the decline in aggregate credit provision is driven by the reduction in the supply of trade credit, which follows the bank credit crunch. The results are consistent with the "redistribution view" of trade credit provision, in which bank credit is redistributed by way of trade credit by the firms with stronger financial position to the firms with weaker financial stand "--World Bank web site.

Download or read book Corporate Bankruptcy Prediction written by Błażej Prusak and published by MDPI. This book was released on 2020-06-16 with total page 202 pages. Available in PDF, EPUB and Kindle. Book excerpt: Bankruptcy prediction is one of the most important research areas in corporate finance. Bankruptcies are an indispensable element of the functioning of the market economy, and at the same time generate significant losses for stakeholders. Hence, this book was established to collect the results of research on the latest trends in predicting the bankruptcy of enterprises. It suggests models developed for different countries using both traditional and more advanced methods. Problems connected with predicting bankruptcy during periods of prosperity and recession, the selection of appropriate explanatory variables, as well as the dynamization of models are presented. The reliability of financial data and the validity of the audit are also referenced. Thus, I hope that this book will inspire you to undertake new research in the field of forecasting the risk of bankruptcy.

Download or read book Governance And Financial Performance Current Trends And Perspectives written by Constantin Zopounidis and published by World Scientific. This book was released on 2023-02-10 with total page 340 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book focuses on corporate governance and proposes a novel framework for combining the Corporate Governance Framework (CGF) with current corporate finance issues arising in the Contemporary Business Environment (CBE) and cointegrating them with today's business needs. It consists of a good collection of state-of-the-art approaches that will be useful for new researchers and practitioners working in this field, helping them to quickly grasp the current state of corporate governance and corporate financial performance.Good corporate governance is not only important for companies, but also for the society. To begin with, good corporate governance strengthens the public's faith and trust in corporate governance. Legislative processes were developed to protect the society from known threats and prevent problems from occurring or recurring. Recent corporate scandals shed light on the impact that corporations have on social responsibility. The new focus on the corporate governance framework increases the responsibility and accountability of companies to their stakeholders and provides a solid framework for enhancing corporate performance.