Failure prediction from the investors’ view by using financial ratios. Lesson from Romania

Achim, Monica Violeta; Borlea, Sorin Nicolae; Găban, Lucian

doi:10.15240/tul/001/2016-4-009

Cited by 3 publications

(7 citation statements)

References 12 publications

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“…Financial results have recently been studied together with linguistic information to achieve more accurate financial decision-making models (Loughran & McDonald, 2011;Davis et al, 2012;Engelberg et al, 2012;Zuchewicz, 2012;Deaconu et al, 2016;Achim, 2016). Thus, financial performance can be examined in relation to managerial behaviour (Merkl-Davies et al, 2011) and the expected reactions of stakeholders (Yekini, Wisniewski, & Yuval, 2016).…”

Section: Literature Reviewmentioning

confidence: 99%

Comprehensive assessment of firm financial performance using financial ratios and linguistic analysis of annual reports

Myšková¹,

Hájek²

2017

Journal of International Studies

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Abstract. Indicators of financial performance, especially financial ratio analysis, have become important financial decision-support information used by firm management and other stakeholders to assess financial stability and growth potential. However, additional information may be hidden in management communication. The article deals with the analysis of the annual reports of U.S. firms from both points of view, a financial one based on a set of financial ratios, and a linguistic one based on the analysis of other information presented by firms in their annual reports. Spearman correlation coefficient is used to compare the values of financial and linguistic indicators. For the purpose of the comprehensive assessment, novel word lists are proposed, specifically designed for each category of financial analysis. The aim is to assess the information ability of annual reports and whether successful firms present their results precisely or not. The results show that the proposed topic dictionaries can be beneficial, especially for the assessment of cash flow and leverage ratios.

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Section: Literature Reviewmentioning

confidence: 99%

Comprehensive assessment of firm financial performance using financial ratios and linguistic analysis of annual reports

Myšková¹,

Hájek²

2017

Journal of International Studies

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“…( : The current stock price before the stock repurchase If you had to choose between stock repurchase and dividend payments in cash, in perfect market conditions, the market is not perfect, the investor may have a preference for one of two alternatives to it. If the choice falls to the repurchase of shares, then there are three methods that can be used, namely: (1). Shares purchased on the open market; (2).…”

Section: Model Researchmentioning

confidence: 99%

“…As a result, there are two possibilities for shareholders and the company that is detrimental or beneficial. From the aspect of profits for shareholders, repurchase stock consists of: (1). Stock repurchase often seen as a positive sign for investors because the stock repurchase generally done if the company feels that the stock is undervalued; (2).…”

Section: Model Researchmentioning

confidence: 99%

“…Stock repurchase reduces the number of shares outstanding in the market, so that after the stock repurchase, there is the possibility of the stock price rises. While aspects of loss for shareholders can be: (1). Companies buy back shares at a price too high to the detriment of shareholders did not sell back its shares; (2).…”

Section: Model Researchmentioning

confidence: 99%

“…As a result, companies can lose money or profit. The advantages for companies are: (1). Avoid the dividend increase; (2).…”

Section: Economic Situation Uncertainmentioning

confidence: 99%

See 2 more Smart Citations

Trends in Free Cash Flow Company of The Issuer Stock Exchange

Bararuallo¹,

Lara²

2019

(GJEB)

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This study aims to examine the tendency of prioritizing management companies listed on Indonesia Stock Exchange (IDX) allocate free cash flow. Respondents there were 23 companies listed on IDX who has a wealth of at least the IDR 1.2 trillions. Questionnaires were sent based on four economic situation, namely: the situation is stable or normal, getting better, getting worse, and the uncertain economic situation. The fourth economic situation is faced with five options for allocating free cash flow, namely: payment of cash dividends, buy back stock, make acquisitions, purchase of financial assets, and distribute it to other areas of investment, such as option's Mutual Funds. Incidentally Indonesia's economic situation was observed 2015-2016 is the worsening situation in which the rupiah exchange rate against the USD around IDR 14,500. Similar to the economic situation in 1997/ 1998. The results show that the worsening economic situation the management of companies listed on IDX prefers: the purchase of shares and investments in other business fields, followed by The purchase of financial assets and acquisitions, and payment of cash dividends in the final choice

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Predictions of failure and financial distress: A study on Portuguese high and medium-high technology small and mid-sized enterprises

Tong¹,

Serrasqueiro²

2021

Journal of International Studies

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The main purpose of this paper is to find the differences in the impacts of financial factors on business failure and financial distress. Using the traditional logistic regression method, this paper studies the ability of financial indicators to predict business failure and financial distress of small and mid-sized enterprises in Portuguese high and medium-high technology manufacturing sectors. The research results show that: (1) differences between financially healthy firms and failed firms are more obvious than differences between financially healthy firms and financially distressed firms; (2) the accurate rate of failure prediction decreases with time prolonging (from one year to three years prior to the event), whereas that of financial distress prediction maintains stable at a relatively lower level; (3) profitability is the most important indicator, which is negatively related to the probability of both business failure and financial distress; (4) debt-related and liquidity-related factors (especially indebtedness and general liquidity) are also important in predicting business failure and financial distress. This paper enriches the research literature on the predictions of both business failure and financial distress.

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Failure prediction from the investors’ view by using financial ratios. Lesson from Romania

Abstract: The purpose of our study is to identify which fi nancial indicators have a signifi cant impact on the probability of Romanian companies' bankruptcy

Cited by 3 publications

References 12 publications

Comprehensive assessment of firm financial performance using financial ratios and linguistic analysis of annual reports

Comprehensive assessment of firm financial performance using financial ratios and linguistic analysis of annual reports

Trends in Free Cash Flow Company of The Issuer Stock Exchange

Predictions of failure and financial distress: A study on Portuguese high and medium-high technology small and mid-sized enterprises

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