Theoretical and Applied Economics
No. 9 / 2011 (562)
Predicting Bankruptcy in Pakistan
International Islamic University (IIU), Islamabad
Qaiser ABBAS
International Islamic University (IIU), Islamabad
Abstract. This paper aims to identify the financial ratios that are most significant in bankruptcy prediction for the non-financial sector of Pakistan based on a sample of companies which became bankrupt over the time period 1996-2006. Twenty four financial ratios covering four important financial attributes, namely profitability, liquidity, leverage, and turnover ratios, were examined for a five-year period prior bankruptcy. The discriminant analysis produced a parsimonious model of three variables viz. sales to total assets, EBIT to current liabilities, and cash flow ratio. Our estimates provide evidence that the firms having Z-value below zero fall into the “bankrupt” whereas the firms with Z-value above zero fall into the “non-bankrupt” category. The model achieved 76.9% prediction accuracy when it is applied to forecast bankruptcies on the underlying sample.
Contents
Corporate Governance in Emerging Economies: The Case of Romania
Banat-Crişana as Micro-destination – Elements of Tourism Image and Tourism Identity
News in Competition Regulation in Romania. Institutional Consolidation of the Competition Council
Education and the Characteristics of Public Goods. Overlaps and Differences
The Remittance-GDP Relationship in the Liberalized Regime of Bangladesh: Cointegration and Innovation Accounting
Limiting Civil Liability in the Sphere of Business Auditing
Analysis of the Possibility to Organize the Management Accounting through the Target Costing (TC) Method in the Romanian Entities
Enhancement of Cooperation and Communication between Universities and the Business Environment, Requirement for a Good Functioning of the Knowledge Triangle: Education, Research, Innovation
Predicting Bankruptcy in Pakistan
Analysis of the Correlation between GDP and the Final Consumption
German SMEs Affected by the World Crisis
Contributions to the Legislative Provisions Governing the Management of Waste Containing Asbestos in Romania and EU
Tourism Competitiveness Index – An Empirical Analysis Romania vs. Bulgaria
Socio-economic Models During the Period of Crisis