Traditional financial ratios and cash flow ratios : Tools for financial distress prediction / Dayang Hafiza Abang Ahmad

Financial distress is a well-known problem among businesses. Such situation is a concern to many stakeholders and therefore, there is a need to have a suitable tool and technique in predicting the likelihood of financial distress. Undeniably, it has a substantial impact on firm performance, capital...

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Main Author:	Abang Ahmad, Dayang Hafiza
Format:	Thesis
Language:	English
Published:	2015
Subjects:	Economics HG Finance
Online Access:	https://ir.uitm.edu.my/id/eprint/36958/1/36958.pdf
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id	my-uitm-ir.36958
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spelling	my-uitm-ir.369582020-11-19T02:38:54Z Traditional financial ratios and cash flow ratios : Tools for financial distress prediction / Dayang Hafiza Abang Ahmad 2015-07 Abang Ahmad, Dayang Hafiza Economics Economic development. Development economics. Economic growth HG Finance Financial management. Business finance. Corporation finance Financial distress is a well-known problem among businesses. Such situation is a concern to many stakeholders and therefore, there is a need to have a suitable tool and technique in predicting the likelihood of financial distress. Undeniably, it has a substantial impact on firm performance, capital structure and investment decision. This study aims to examine further into this issue. Specifically, this study examine whether ratio analysis is associated with financially distressed firms. This study investigates the differences in the mean score of ratios between financially distressed firms and non financially distressed firms. This study also attempts to identify the components of ratios that can become the most significant predictor of financial distress. The total sample of the study is 210 firms consisting of 105 financially distressed firms and 105 non financially distressed firms from various industries. Financially distressed firms were selected based on PN17 list updated by Bursa Malaysia. The financially distressed firms were then matched paired with the non-financially distressed firms of similar industry and size. The data was obtained from the financial statements of the firms over five years prior to the financial distress year. The independent sample t-test and logistic regression analysis were used to analyse the data. The result shows that there is a significant difference in the mean score of ratios between the two groups. Significant relationship between financial distress and predictor variables were also examined. The results show that RCACL, RWCTA, RCFTA and RCFTFA were found to be significantly associated with the probability of financial distress. Such results indicate that liquidity and efficiency were the most significant predictors of financial distress. This study is significant not only from the theoretical perspective but also from the perspectives of the practitioners and regulators in determining the causes of financial distress. 2015-07 Thesis https://ir.uitm.edu.my/id/eprint/36958/ https://ir.uitm.edu.my/id/eprint/36958/1/36958.pdf text en public masters Universiti Teknologi MARA Cawangan Sarawak Faculty of Accountancy
institution	Universiti Teknologi MARA
collection	UiTM Institutional Repository
language	English
topic	Economics Economics HG Finance Economics
spellingShingle	Economics Economics HG Finance Economics Abang Ahmad, Dayang Hafiza Traditional financial ratios and cash flow ratios : Tools for financial distress prediction / Dayang Hafiza Abang Ahmad
description	Financial distress is a well-known problem among businesses. Such situation is a concern to many stakeholders and therefore, there is a need to have a suitable tool and technique in predicting the likelihood of financial distress. Undeniably, it has a substantial impact on firm performance, capital structure and investment decision. This study aims to examine further into this issue. Specifically, this study examine whether ratio analysis is associated with financially distressed firms. This study investigates the differences in the mean score of ratios between financially distressed firms and non financially distressed firms. This study also attempts to identify the components of ratios that can become the most significant predictor of financial distress. The total sample of the study is 210 firms consisting of 105 financially distressed firms and 105 non financially distressed firms from various industries. Financially distressed firms were selected based on PN17 list updated by Bursa Malaysia. The financially distressed firms were then matched paired with the non-financially distressed firms of similar industry and size. The data was obtained from the financial statements of the firms over five years prior to the financial distress year. The independent sample t-test and logistic regression analysis were used to analyse the data. The result shows that there is a significant difference in the mean score of ratios between the two groups. Significant relationship between financial distress and predictor variables were also examined. The results show that RCACL, RWCTA, RCFTA and RCFTFA were found to be significantly associated with the probability of financial distress. Such results indicate that liquidity and efficiency were the most significant predictors of financial distress. This study is significant not only from the theoretical perspective but also from the perspectives of the practitioners and regulators in determining the causes of financial distress.
format	Thesis
qualification_level	Master's degree
author	Abang Ahmad, Dayang Hafiza
author_facet	Abang Ahmad, Dayang Hafiza
author_sort	Abang Ahmad, Dayang Hafiza
title	Traditional financial ratios and cash flow ratios : Tools for financial distress prediction / Dayang Hafiza Abang Ahmad
title_short	Traditional financial ratios and cash flow ratios : Tools for financial distress prediction / Dayang Hafiza Abang Ahmad
title_full	Traditional financial ratios and cash flow ratios : Tools for financial distress prediction / Dayang Hafiza Abang Ahmad
title_fullStr	Traditional financial ratios and cash flow ratios : Tools for financial distress prediction / Dayang Hafiza Abang Ahmad
title_full_unstemmed	Traditional financial ratios and cash flow ratios : Tools for financial distress prediction / Dayang Hafiza Abang Ahmad
title_sort	traditional financial ratios and cash flow ratios : tools for financial distress prediction / dayang hafiza abang ahmad
granting_institution	Universiti Teknologi MARA Cawangan Sarawak
granting_department	Faculty of Accountancy
publishDate	2015
url	https://ir.uitm.edu.my/id/eprint/36958/1/36958.pdf
_version_	1783734380862111744

Traditional financial ratios and cash flow ratios : Tools for financial distress prediction / Dayang Hafiza Abang Ahmad

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