The Dynamic Research on the Relationships between Financial Ratios and Financial Distress

• Main Authors: Hwang Sheue-Fen, 黃雪芬
• Other Authors: Cheng Yen-Shin
• Format: Others
• Language: zh-TW
• Published: 2016
• Online Access: http://ndltd.ncl.edu.tw/handle/9r6y9p

碩士 === 國立高雄應用科技大學 === 金融系金融資訊碩士在職專班 === 104 === This study discusses and analyzes, based on the binary logistic regression model, the possible factors causing an enterprise crisis. The annual financial reports of listed companies at stock exchange market, at over-the-counter market and at emerging stock market from 2004 to 2014, 14,723 in total, are adopted. Excluding the security industry, insurance industry and banking industry. The analysis of this study is made as follows: The variables that considerably influence the possibility of a company’s having financial difficulty include the quick ratio, the debt ratio, the long-term funds to fixed assets ratio, the interest coverage ratio,.the operating gross ratio, the return of net value ratio, the total asset turnover ratio, inventory turnover ratio, and account payable turnover ratio. The financial ratios which do not influentially trigger a company’s financial difficulty are the operation cash flow ratio, the revenue growth rate, the debt/equity ratio, receivalbes turnover ratio, net value turnover ratio, net operation cycle. With the binary logistic regression model’s explanatory capability, 99.35% assessments ofassessments of enterprises are precisely made. 99.86% of the enterprises are considered financially stable as predicted; 41.73% of the enterprises are financially threatened as predicted. The error rate of Model I’s testing result is merely 0.14%, indicating its high precision in pre-assessment of a financially stable enterprise. The error rate of Model II’s testing result is up to 58.27%. According to the result from dynamic empirical analysis year by year, it is highly possible to mistakenly regard a financially threatened enterprise as a financially stable one if just using financial ratios only to explain the dissimilar existences between different year. It can therefore be concluded that the very few variables are not capable of prediction the factors leading to an enterprise’ financial crisis.