Development of a Financial Health Indicator Based on Companies’ Annual Accounts

National Bank of Belgium Working Paper No. 213

92 Pages Posted: 12 Apr 2011

Date Written: April 1, 2011

Abstract

This document describes the development of a financial health indicator based on companies' financial statements. This indicator is conceived as a weighted combination of variables, which is obtained through a model discriminating between failing firms and non-failing firms. The definition of failure is based on a legal criterion, namely that a company is considered to have failed if it has faced bankruptcy or judicial administration in the past. Based on the model results, companies are positioned in financial health classes, which are intended to be included in the "company files" designed by the Central Balance Sheet Office.

Keywords: Corporate failure, logistic regression, micro-data, financial statements

JEL Classification: C25, G30, G33

Suggested Citation

Vivet, David, Development of a Financial Health Indicator Based on Companies’ Annual Accounts (April 1, 2011). National Bank of Belgium Working Paper No. 213 , Available at SSRN: https://ssrn.com/abstract=1805635 or http://dx.doi.org/10.2139/ssrn.1805635

David Vivet (Contact Author)

National Bank of Belgium ( email )

Brussels, B-1000
Belgium

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
108
Abstract Views
758
Rank
512,601
PlumX Metrics