Using Financial Ratios to Identify Romanian Distressed Companies

Madalina Andreica (1) , Mugurel Ionut Andreica (2) , Marin Andreica (3)

1 The Department of Economic Informatics and Cybernetics / Departamentul de Informatică şi Cibernetică Economică
2 Parallel and Distributed Systems Laboratory [Bucarest]
3 CIG ASE - The Faculty of Accounting and Management Information Systems, Academia de Studii Economice din Bucureşti

In the context of the current financial crisis, when more companies are facing bankruptcy or insolvency, the paper aims to find methods to identify distressed firms by using financial ratios. The study will focus on identifying a group of Romanian listed companies, for which financial data for the year 2008 were available. For each company a set of 14 financial indicators was calculated and then used in a principal component analysis, followed by a cluster analysis, a logit model, and a CHAID classification tree.

Mots clés: distressed company; financial ratio; cluster; CHAID; logit model

Domaines: Finance quantitative [q-fin.CP]; Ingénierie, finance et science [cs.CE]

Madalina Andreica, Mugurel Ionut Andreica, Marin Andreica. Using Financial Ratios to Identify Romanian Distressed Companies. Economy Journal - Series Management (ISSN: 1454-0320), 2009, 12 (special issue no. 1), pp.46-55. ⟨hal-00474278⟩