Analysis of the Reality of Forecasting Corporate Default Using Non - Financial Indicators - A Suggested Model

Authors

  • Layla Naji Majeed Al Fatlawi

Abstract

The research aims to build a mathematical model to analyze the performance of companies using non-financial indicators by data and explanations received from companies at the end of each financial period, so as to complement the approved models using financial indicators. The research assumed that the proposed model is not suitable for the use of non-financial indicators as a tool for predicting the financial default. The research was based on the applied side on the Iraqi industrial joint stock selected companies for the period (2009-2017). A group of default and non-default companies were selected for the purpose of testing the research sample, in order to achieve the main objective of the study, which is to build a model for predicting the financial default of the industrial sector for Iraqi public shareholding companies.

 The research has reached a set of conclusions; the most important are the following:

1-                                          The results of the percentage values showed the potential of the proposed statistical classification model derived from the non-financial indicators, by reviewing the percentages of the model, it was found that the statistical classification capacity of the default company’s model was reached 75%.

The accuracy of the statistical classification model of the default companies reached 75%, while its ability to classify the default companies was 91.7%, this means that it succeeded in classifying 11 companies correctly and 1 company mistakenly.

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Published

2020-01-25

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Section

Articles