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    The financial performance of small and medium sized companies: A model based on accountancy data is developed to predict the financial performance of small and medium sized companies.

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    Publication date
    2009-09-08T14:17:55Z
    Author
    Earmia, Jalal Y.
    Supervisor
    Betts, James
    Keyword
    Financial ratios
    Discriminant analysis
    Company failure
    Small-medium companies
    Failure prediction
    Accountancy data
    Financial reporting
    Z-scores
    Trend analysis
    Financial performance
    Rights
    Creative Commons License
    The University of Bradford theses are licenced under a Creative Commons Licence.
    Institution
    University of Bradford
    Department
    Post-graduate School of Industrial Technology
    Awarded
    1991
    
    Metadata
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    Abstract
    This study is concerned with developing a model to identify small-medium U.K. companies at risk of financial failure up to five years in advance. The importance of small companies in an economy, the impact of their failures, and the lack of failure research with respect to . this population, provided justification for this study. The research was undertaken in two stages. The first stage included a detailed description and discussion of the nature and role of small business in the UK economy, heir relevance, problems and Government involvement in this sector, together with literature review and assessment of past research relevant to this study. The second stage was involved with construction of the models using multiple discriminant analysis, applied to published accountancy data for two groups of failed and nonfailed companies. The later stage was performed in three parts : (1) evaluating five discriminant models for each of five years prior to failure; (2) testing the performance of each of the .five models over time on data not used . in their construction; (3) testing the discriminant models on a validation sample. The purpose was to establish the "best" discriminant model. "Best" was determined according to classification ability of the model and interpretation of variables. Finally a model comprising seven financial ratios measuring four aspects of a company's financial profile, such as profitability, gearing, capital turnover and liquidity was chosen. The model has shown to be a valid tool for predicting companies' health up to five years in advance.
    URI
    http://hdl.handle.net/10454/3406
    Type
    Thesis
    Qualification name
    PhD
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