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Assessment of the bankruptcy risk based on the solvency ratio

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  • Daniel BRÎNDESCU-OLARIU

    (West University of Timisoara, Romania)

Abstract

The current paper sets to develop a methodology for assessing the bankruptcy risk for Romanian companies based on the solvency ratio. A previous study performed over a paired sample of 1176 Romanian companies showed that the solvency ratio had potential for predicting bankruptcy, but was not able to set a benchmark because of the differences between the structure of the paired sample and the structure of the population. The present research was performed over a larger sample, that included 53252 yearly financial statements and that was similar in structure to the entire population of Romanian companies. The results allow for the proposal of a methodology for assessing the bankruptcy risk based on risk classes.

Suggested Citation

  • Daniel BRÎNDESCU-OLARIU, 2016. "Assessment of the bankruptcy risk based on the solvency ratio," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(3(608), A), pages 257-266, Autumn.
    • Handle: RePEc:agr:journl:v:xxiii:y:2016:i:3(608):p:257-266
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    Cited by:

    1. Sorana Vătavu & Oana-Ramona Lobonț & Iulia Para & Andrei Pelin, 2018. "Addressing oil price changes through business profitability in oil and gas industry in the United Kingdom," PLOS ONE, Public Library of Science, vol. 13(6), pages 1-22, June.

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