Bankruptcy Prediction Model for Private Limited Companies of Lithuania
Articles
Gediminas Šlefendorfas
Published 2016-04-12
https://doi.org/10.15388/Ekon.2016.1.9910
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Keywords

bankruptcy prediction model
private limited companies
multivariate discriminant analysis method
Lithuania

How to Cite

Šlefendorfas, G. (2016) “Bankruptcy Prediction Model for Private Limited Companies of Lithuania”, Ekonomika, 95(1), pp. 134–152. doi:10.15388/Ekon.2016.1.9910.

Abstract

The paper is mainly devoted to the bankruptcy prediction models and their ability to assess a bankruptcy probability for Lithuanian companies. The study showed that the most common type of companies in Lithuania is a private limited company, therefore, the main objective was to analyse such companies’ financial information and by using these results, create a new bankruptcy prediction model, which would allow to predict the bankruptcy probability as accurately as possible. 145 companies (73 already bankrupt and 72 still operating) were chosen as a primary sample and by using multivariate discriminant analysis stepwise method a linear function ZGS has been created. To achieve that, 156 different financial ratios were selected as a primary input data by using correlation calculation between bankruptcy and still operating companies and Mann – Whitney U test techniques. The results showed that 89% of companies were classified correctly, which states that the model is strong enough to predict bankruptcy probability for private limited companies operating in Lithuania in a sufficient accuracy.

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