IDEAS home Printed from
   My bibliography  Save this article

Cash Flow in Corporate Bankruptcy. A Literature Review


  • Dariusz Wedzki

    () (Katedra Rachunkowosci, Uniwersytet Ekonomiczny, Polska)


W artykule dokonano przegladu literatury swiatowej i polskiej na temat wykorzystania wskaznikow finansowych, bazujacych na przeplywach pienieznych, do prognozowania upadlosci przedsiebiorstwa. Dokonano przegladu formul wskaznikow opartych na przeplywach pienieznych. Zaproponowano kierunki dalszych badan. Sformulowano rowniez opinie, ze bardzo malo eksplorowanym obszarem jest stosowanie tzw. analiz znakow w modelowaniu upadlosci.The paper presents a review of world and Polish literature on usage of financial ratios based on cash flow for corporate bankruptcy prediction. In the field of bankruptcy modeling it was concluded that: • cash flow is significantly different comparing to net income and therefore cash flow provides important information, • simplified measures of cash flow have lower significance than cash flow statement. In the field of the construction of financial ratios based on cash flow, some directions of further research were suggested: • broader implementation of cash flow statement, • construction of cash flow financial ratios comparable to accrual financial ratios, • incorporation of cause-effect relations between ratios to bankruptcy model. Finally an opinion that the so-called sign analysis of cash flow an under-explored oved in bankruptcy modeling was formed.

Suggested Citation

  • Dariusz Wedzki, 2008. "Cash Flow in Corporate Bankruptcy. A Literature Review," Operations Research and Decisions, Wroclaw University of Technology, Institute of Organization and Management, vol. 2, pages 87-104.
  • Handle: RePEc:wut:journl:v:2:y:2008:p:87-104

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. repec:bla:joares:v:23:y:1985:i:1:p:384-401 is not listed on IDEAS
    2. Edward I. Altman, 1968. "Financial Ratios, Discriminant Analysis And The Prediction Of Corporate Bankruptcy," Journal of Finance, American Finance Association, vol. 23(4), pages 589-609, September.
    3. Laitinen, Erkki K. & Laitinen, Teija, 2000. "Bankruptcy prediction: Application of the Taylor's expansion in logistic regression," International Review of Financial Analysis, Elsevier, vol. 9(4), pages 327-349.
    4. repec:bla:joares:v:23:y:1985:i:1:p:146-160 is not listed on IDEAS
    5. Dambolena, Ismael G & Khoury, Sarkis J, 1980. " Ratio Stability and Corporate Failure," Journal of Finance, American Finance Association, vol. 35(4), pages 1017-1026, September.
    Full references (including those not matched with items on IDEAS)


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wut:journl:v:2:y:2008:p:87-104. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Piotr Wawrzynowski). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.