مجلة اقتصاديات الاعمال والتجارة
Volume 8, Numéro 2, Pages 408-424
2023-09-30

The Role Of The Discriminant Analysis Model In Predicting The Financial Failure Of Economic Institutions

Authors : Djoudi Nariman . Belhamri Kheira .

Abstract

This study aimed to highlight the importance and effectiveness of using discriminant analysis in order to build a standard model for predicting default, which is based on a set of financial ratios for early detection of failure of economic institutions and financial risks; based on a sample of 17 successful and 13 failed enterprises. The results of the study showed that one out of nine financial ratios has the ability to distinguish between failed and successful institutions, which are the total asset turnover rate. We were able to produce a model with an effective classification quality of 76.67%.

Keywords

Discriminant analysis ; Predicting ; Financial failure ; Financial ratios