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Bankruptcy Risk Prediction Using Statistical Methodology And Its Impact On Business Profitability

Author

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  • Denisa (Gae) Catîru

    (University of Craiova, Faculty of Economics and Business Administration, Craiova, Romania)

Abstract

The main objective of the study is to analyse the bankruptcy risk and its impact on business profitability. Depending on the risks faced by the entities, the most relevant economic and financial indicators project the extent to which profitability is affected. In the context of risks generated by the financial-accounting activity (risks improperly managed), their consequences lead to the instability of the entity, affecting the overall profitability. To predict the bankruptcy risk, we will use statistical techniques, which help to provide accurate, reliable financial information, both within companies and external users. Based on financial ratios that accurately reflect the likelihood of bankruptcy, a sample of companies listed on the Bucharest Stock Exchange for the period 2015-2019 is analysed. The models used in carrying out this study are: Ion Anghel’s model and Altman’s model. The results obtained aim at the analysis of the bankruptcy risk from two perspectives and at the same time can represent a landmark in the substantiation of managerial decision-making for the Romanian entities.

Suggested Citation

  • Denisa (Gae) Catîru, 2022. "Bankruptcy Risk Prediction Using Statistical Methodology And Its Impact On Business Profitability," Annals of University of Craiova - Economic Sciences Series, University of Craiova, Faculty of Economics and Business Administration, vol. 1(50), pages 13-22, April.
    • Handle: RePEc:aio:aucsse:v:1:y:2022:i:50:p:13-22
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    File URL: http://feaa.ucv.ro/annals/v1_2022/002.pdf
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    More about this item

    Keywords

    bankruptcy risk; financial ratios; statistical methods; discriminant analysis; profitability.;
    All these keywords.

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M16 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - International Business Administration

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