Financial Ratios, Size, Industry and Interest Rate Issues in Company Failure: An Extended Multidimensional Scaling Analysis

Book English OPEN
Mar Molinero, Cecilio ; Neophytou, Evi (2005)
  • Publisher: kbs
  • Subject: H

Three-way multidimensional scaling methods are used to study the differences between\ud UK failed and continuing companies from 1993 to 2001. The technique allows for\ud visual representations of the results, so that qualitative information can be brought to\ud bear when judging the health of a company. It is shown that it is important to take into\ud account company size and area of activity. Results also suggest that the ratio structure\ud of the companies varies between years in response to changes in the interest rates,\ud suggesting that the frontier between failing and continuing firms moves in response to\ud the economic cycle.
  • References (37)
    37 references, page 1 of 4

    Altman, E. I. (1968), Financial Ratios, Discriminant Analysis and the Prediction of Corporate Bankruptcy, The Journal of Finance, 23 (4), pp. 589-609.

    Beaver, W. H. (1966), Financial Ratios as Predictors of Failure, Empirical Research in Accounting: Selected Studies 1966, Journal of Accounting Research, Supplement to Volume 5, pp. 71-111.

    Boritz, J. E., Kennedy, D. B. and Albuquerque, A. (1995), Predicting Corporate Failure Using a Neural Network Approach, Intelligent Systems in Accounting, Finance and Management, 4, pp. 95-111.

    Carroll, J. D. and Chang, J. J. (1970), Analysis of Individual Differences in Multidimensional Scaling via an N-Way Generalisation of “Erkart-Young” Decomposition, Psychometrica, 35, pp. 283-319.

    Charitou, A., Neophytou, E. and Charalambous, C. (2004), Predicting Corporate Failure: Empirical Evidence for the UK, European Accounting Review, 13 (3), pp. 465-497.

    Cox, T. F. and Cox, M. A. A. (2001), Local Minima in Nonmetric Multidimensional Scaling,

    Deakin, E. B. (1972), A Discriminant Analysis of Predictors of Business Failure, Journal of Accounting Research, 10 (1), pp. 167-179.

    Edmister, R. O. (1972), An Empirical Test of Financial Ratio Analysis for Small Business Failure Prediction, Journal of Financial and Quantitative Analysis, 7 (2), pp. 1477-1493.

    El Hennawy, R. and Morris, R. (1983), The Significance of Base Year in Developing Factor Prediction Models, Journal of Business Finance and Accounting, 10, pp. 209-223.

    Elliott, B. and Elliott, J. (2004), Financial Accounting and Reporting, 8th edition, FT: Prentice Hall Financial Times.

  • Metrics
    views in OpenAIRE
    views in local repository
    downloads in local repository

    The information is available from the following content providers:

    From Number Of Views Number Of Downloads
    Kent Academic Repository - IRUS-UK 0 71
Share - Bookmark