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Growing Science » Management Science Letters » A study on capability of financial ratios in predicting bankruptcy of firms: Evidence from Tehran Stock Exchange

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Management Science Letters
ISSN 1923-9343 (Online) - ISSN 1923-9335 (Print)
Quarterly Publication
Volume 3 Issue 7 pp. 2119-2124, 2013

A study on capability of financial ratios in predicting bankruptcy of firms: Evidence from Tehran Stock Exchange Pages 2119-2124 PDF Download PDF

Authors: Ghodratollah Janani, Seyed Ali Nabavi Chashmi, Khosro Faghani Makrani

📋 Author Affiliations:
Ghodratollah Janani, Seyed Ali Nabavi Chashmi, Khosro Faghani Makrani
¹ Department Management and Accounting, Science & Research Branch of Mazandaran, Islamic Azad University, Sari, Iran
doi 10.5267/j.msl.2013.06.006
Crossref Source: CrossRef

🔑 Keywords: Bankruptcy; CART, Financial ratios, Logistic regression

Abstract: This paper measures the likelihood of bankruptcy based on some financial ratios such as debt ratio, current ratio, sales to total assets, etc. using logistic regression and classification and regression tree techniques (CART). The proposed study gathers the information of 36 bankrupted firms and 36 non-bankrupted firms based on Tobin Q ratio. The study gathers the necessary information over the period 2005-2011. The preliminary results indicate that both methods have the capability to predict bankruptcy but with different accuracy. The likelihood of bankruptcy based on CART method were 97.2, 97.5 and 86.1 in the event of bankruptcy, one year before and two years prior to bankruptcy, respectively. These figures were changes to 98.6, 94.4 and 84.7 based on logistic method.

How to cite this paper
APA: Janani, G., Chashmi, S & Makrani, K. (2013). A study on capability of financial ratios in predicting bankruptcy of firms: Evidence from Tehran Stock Exchange. Management Science Letters, 3(7), 2119-2124.
Chicago/Turabian: Janani, G., Chashmi, S & Makrani, K. 2013. "A study on capability of financial ratios in predicting bankruptcy of firms: Evidence from Tehran Stock Exchange." Management Science Letters 3, no. 7 (2013): 2119-2124.
AMA: Janani, G., Chashmi, S & Makrani, K. A study on capability of financial ratios in predicting bankruptcy of firms: Evidence from Tehran Stock Exchange. Management Science Letters. 2013;3(7):2119-2124.

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📚 Journal: Management Science Letters | 📅 Year: 2013 | 📖 Volume: 3 | 📄 Issue: 7 | 👁️ Views: 2403 | 📊 Crossref:

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