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The prognostic value of financial statements: Detecting business failure using financial ratios?
Jönköping University, Jönköping International Business School, JIBS, Accounting and Finance. Jönköping University, Jönköping International Business School, JIBS, Business Administration.
2013 (English)Independent thesis Advanced level (degree of Master (One Year)), 10 credits / 15 HE creditsStudent thesis
Abstract [en]

The research for detecting business failure using financial ratios started in the late 60’s and has been researched in various ways since. Previous researchers suggest that big changes in the macroeconomic environment give the need for updated work on this area. With the latest financial crisis in mind and the fact that very few updated studies have been made on Swedish corporations’ gives reason to as to why this thesis is needed.

This study uses a sample of 25 Swedish firms that went bankrupt 2012 or later and 25 healthy ones. The study then inspects the five years prior to failure of all these 50 companies for identifying what financial ratios can be used for detecting failure. For an interesting perspective, five of the failed firm’s textual presentation of their future for the last year prior to failure was also inspected.

The findings suggest that financial ratios can be used for detecting failures. Strong indications are found the last year before failure with decreasing indications the more years before failure you look. The findings contribute to society on a practical level supporting stakeholders in their decision making.

Place, publisher, year, edition, pages
2013.
National Category
Business Administration
Identifiers
URN: urn:nbn:se:hj:diva-21299OAI: oai:DiVA.org:hj-21299DiVA: diva2:624298
Supervisors
Available from: 2013-09-03 Created: 2013-05-30 Last updated: 2013-09-03Bibliographically approved

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CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf