A Study of Financial Distress based on MDA
The present study is crucial importance to build up a model to develop the predictive abilities for company failures in a later time frame with different financial, business and operating conditions in the Indian context. A total of sixty-four private sector pharmaceutical companies were analyzed with sixteen financial ratios using multiple discriminant analysis. A strong discriminant function was constructed with seven ratios found to be significant in discriminating power and the classification results showed high predictive accuracy rates of between 88% and 94% for each of the five years prior to actual failure. This study also indicated that even with more advanced statistical tools more popularly used recently, MDA is still a very reliable and potent statistical tool.
This work is licensed under a Creative Commons Attribution 3.0 License.
To make sure that you can receive messages from us, please add the 'macrothink.org' domain to your e-mail 'safe list'. If you do not receive e-mail in your 'inbox', check your 'bulk mail' or 'junk mail' folders.
Copyright © Macrothink Institute ISSN 1941-899X
'Macrothink Institute' is a trademark of Macrothink Institute, Inc.