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Comparative analysis of liquidity ratios of bankrupt manufacturing companies

Author

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  • Sebastian Tomczak

Abstract

Permanent monitoring of the financial condition of the market increases the chances of survival of the company among of increasing competition in the market. Integrated models are used in the evaluation of corporate bankruptcy. The author has analyzed five liquidity ratios (which have a predictive characteristics) of bankrupt and operating companies in the manufacturing sector in the period 2007-2012. In order to reflect changes in the financial condition of the examined companies, the author has analyzed the above-mentioned indicators during the year prior to bankruptcy. This article has attempted to designate the range limit of the liquidity ratios, below or above which there is over liquidity or the lack of liquidity in the manufacturing sector. The limit values were established for three analyzed indicators. However, for two liquidity ratios it was difficult to specify its limits values because of its positive values (caused by selling fixed assets by insolvent companies).

Suggested Citation

  • Sebastian Tomczak, 2014. "Comparative analysis of liquidity ratios of bankrupt manufacturing companies," Business and Economic Horizons (BEH), Prague Development Center, vol. 10(3), pages 151-164, October.
    • Handle: RePEc:pdc:jrnbeh:v:10:y:2014:i:3:p:151-164
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    Cited by:

    1. Dzik-Walczak Aneta & Odziemczyk Maciej, 2021. "Modelling cross-sectional tabular data using convolutional neural networks: Prediction of corporate bankruptcy in Poland," Central European Economic Journal, Sciendo, vol. 8(55), pages 352-377, January.
    2. Sebastian Klaudiusz Tomczak & Edward Radosiński, 2017. "The effectiveness of discriminant models based on the example of the manufacturing sector," Operations Research and Decisions, Wroclaw University of Science and Technology, Faculty of Management, vol. 27(3), pages 81-97.
    3. Srecko Devjak, 2023. "Corporate Liquidity in Coronacrisis: Experience of Serbian Economy," Central European Business Review, Prague University of Economics and Business, vol. 2023(1), pages 1-20.
    4. Andrzej Geise & Magdalena Kuczmarska & Jarosław Pawlowski, 2021. "Corporate Failure Prediction of Construction Companies in Poland: Evidence from Logit Model," European Research Studies Journal, European Research Studies Journal, vol. 0(1), pages 99-116.
    5. Tomczak Sebastian Klaudiusz, 2018. "Statistics on Bankruptcy of Companies in Poland," Management Sciences. Nauki o Zarządzaniu, Sciendo, vol. 23(3), pages 39-50, September.
    6. Garvan Whelan & Paul Hanly & Vincent O’Connell & Oldřich Ludwig Dittrich & Naser Abu Ghazalah, 2021. "Impact on Firm Liquidity Arising from Outsourcing Decisions as Evidenced by Off-Balance-Sheet Disclosures," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 27(1), pages 17-27, February.
    7. Antonio Pelaez-Verdet & Pilar Loscertales-Sanchez, 2021. "Key Ratios for Long-Term Prediction of Hotel Financial Distress and Corporate Default: Survival Analysis for an Economic Stagnation," Sustainability, MDPI, vol. 13(3), pages 1-17, January.

    More about this item

    Keywords

    Bankruptcy; integrated models; liquidity; manufacturing;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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