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Why Do Companies Fail? Considering The Key Problems And Success Factors In Modelling Failure Prediction In An Australian Context, William Wilkinson
Why Do Companies Fail? Considering The Key Problems And Success Factors In Modelling Failure Prediction In An Australian Context, William Wilkinson
Bill Wilkinson
Corporate failure is a regularly recurring problem for stakeholders, particularly investors, creditors and customers. Early attempts at predicting such failure typically relied on analysis of individual performance measurements such as accounting ratios; it was not until the late 1960s that a modelling approach to the problem started to evolve. Altman's Z-score model was the first approach to combine a series of weighted ratios using the statistical technique of multiple discriminant analysis (MDA) to arrive at a final score, which was used to determine whether or not a company was likely to fail. Substantial research has followed over the subsequent 40 …