Measuring business failure by using ratio analysis and discriminant analysis: A research on textile, clothes and leather firms listed in the Istanbul stock exchange

Measuring business failure by using ratio analysis and discriminant analysis: A research on textile, clothes and leather firms listed in the Istanbul stock exchange

Business failure has been one of the most important risks for companies, investors and creditorsfor long years. Local and international markets have been developing and changing with the effect o fglobalization, technological development and economic conditions during recent years. This changeand development make forecasting of business failure foregrounding especially for companies.The purpose of this paper to find out financial ratios that might be useful to measure businessfailure of companies which operate in textile, clothes and leather sector. 23 financial ratios were usedfor multivariate analysis and as a result; 7 of these ratios are found they differentiate between gr oups.By employing these 7 ratios to discriminant analysis, we found out our model has 92% accuracy.

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