The study of Early Warning System of Business Financial Distress Using Financial Ratios of Bank's Credit Rating List in Taiwan Listed & OTC Firms

• Main Authors: Wen-Ping Huang, 黃雯蘋
• Other Authors: Yen-Chen Chiu
• Format: Others
• Language: zh-TW
• Published: 2006
• Online Access: http://ndltd.ncl.edu.tw/handle/56061478695171704283

碩士 === 嶺東科技大學 === 財務金融研究所 === 94 === This paper is to predict business financial distress of financial banking lending using the representing financial ratios in financial statement. The representing financial rations are not only credit rating list but also the variables of financial ratios which do not belong to credit rating list such as cash flow analysis, times-interest-earned analysis and profitability analysis. Moreover, these variables of the study are determined, taking previous three years in the year of business financial distress. The data are focused manufacturing industry of Listed and OTC firms chosen from 1996 to 2005. We apply the Logistic Regression model to build the fittest precaution model. The results show that the accuracy of distress precaution in the OTC firms is less than that the Listed firms. If using the eight financial ratio variables taking previous three years in the year of business financial distress in credit rating list to predict the distress precaution, the amount of accuracy in the OTC firms would be 50%, 100% and 50%, and that the Listed firms would be 92.9%, 71.4% and 89.3%. Besides, if using additional more significant variables through the mean-difference test, the amount of accuracy in the OTC firms would be 64.3%, 50%, and 78.6% and the other firms would be 78.6%, 78.6% and 92.9%. In other words, the more distinctive financial ratios in the Listed firms are Profit Before Taxes, ROA, ROE, Cash Flow Ratio, Cash Flow Proper Ratio and Cash Reinvestment Ratio. However, in the OTC firms, the more distinctive financial ratio is ROE.