The analyze and prognose of risk bankruptcy - case study, Arcelor Mittal Steel Galati
Part of : MIBES Transactions : international journal ; Vol.2, No.1, 2008, pages 131-143
Issue:
Pages:
131-143
Abstract:
The discriminate analysis was resorted to, by means of which the financial characteristics of some companies that went bankrupt and some profitable companies. Socio – economic phenomena are influenced by numerous factors essential and accidental those are related to each other by many ties, intensities and meanings. In terms of economic phenomena there are lots of interdependence relationships requiring the identification and hierarchical ordering of influence factors. Regression models can be used to help understand and explain relationships among variables. The best linear combination of rates leading to clearest differentiation of the two types of companies is then determined. This linear combination is also known as score function. The probability that the analyzed company may become bankrupt in the following years is estimated on the basis of the obtained score. A company is effective and therefore has a minimal bankruptcy risk if its score is high, and vice versa. The score function is a linear function of several variables, which are weighted by certain medium coefficients, established by the smallest squares method, based on the observations made on the companies analyzed and grouped into the two types. In my work, I achieved an analysis of the bankruptcy risk and I tried to adjust Altman and Conan & Holder score functions to the existing realities in Romania. I found this adjustment necessary as their application in the case of Romanian companies leads to paradoxical results, not the converging ones.
Subject (LC):
Keywords:
discriminate analysis, bankruptcy risk, score function
Notes:
Περιέχει σχήματα, πίνακες και βιβλιογραφία
