Forecasting Company Financial Distress Based on the Gradient Measurement of Development
Posted: 5 Jan 2014
Date Written: April 30, 2013
The aim of a warning forecast is to signal “early enough” unfavorable changes in selected business activity areas, described by time series. A warning forecast is, by nature, a long-term forecast; its characteristic feature is the fact that it does not give values of forecasted variables but only a warning against the possibility of unfavorable changes occurring. The presented proposal of building a warning forecast (synthetic measurement) used a taxonomic method of development based on a gradient distance of development, which seems to be an interesting and efficient proposition for forecasting financial difficulties.
The project was funded by the National Science Centre allocated on the basis of the decision number DEC-2011/01/B/HS4/02316.
Keywords: Warning Signals Forecasting, Financial distress, Corporate Finance, Taxonomic methods.
JEL Classification: C53, G30, G32, G33
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