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Probability of Efficiency: Statistical Implications That Lead Firms to Achieve a Minimal and Sufficient ¡°Return-On-Investment¡±

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  • Marco Muscettola

Abstract

After clarifying the relationship between Return-On-Investment (ROI) and the possibility of default, the research sets a minimum level of this ratio, which can generally be assigned to an efficient and healthy firm. From this step we start to comprehend which are the economic and financial variables that owned the firms, three years before, reaching that minimum level of ROI. With logistics methodology and a large sample of 5,388 Italian SMEs, a rating model may be built to predict the probability of efficiency and will be studied accounting variables that lead a firm with more possibilities to be "prospective efficient". Results support the view of the importance of capital structure and operating profitability ratios.

Suggested Citation

  • Marco Muscettola, 2014. "Probability of Efficiency: Statistical Implications That Lead Firms to Achieve a Minimal and Sufficient ¡°Return-On-Investment¡±," Journal of Management and Strategy, Journal of Management and Strategy, Sciedu Press, vol. 5(4), pages 26-36, November.
    • Handle: RePEc:jfr:jms111:v:5:y:2014:i:4:p:26-36
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    Cited by:

    1. Marco Muscettola, 2019. "Distinctiveness of Highly Risky Italian Firms That are Saved-A Logistic Approach," Applied Economics and Finance, Redfame publishing, vol. 6(1), pages 64-73, January.

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