Predicting Bankruptcy And Financial Failure In the Egyptian listed companies: The Importance Of Cash Flow Statements
Penulis Utama
:
Mahmoud Elsayed Mahmoud Mohamed Youssef
NIM / NIP
:
S432302009
×<p class="MsoNormal" xss=removed><span lang="EN-ID" xss=removed>Bankruptcy
prediction has been a crucial focus in finance and accounting, with seminal
models like Altman’s Z-score (1968), Ohlson’s O-score (1980), and Beaver’s
financial ratio-based models (1966) contributing to the understanding of
financial distress. However, these models rely heavily on accrual-based
indicators, which may not fully capture liquidity issues, particularly in
fluctuating economic environments. This study aimed to enhance bankruptcy
prediction for Egyptian listed companies by developing a model that prioritizes
cash flow ratios over traditional accrual-based measures. Using financial data
from 41 companies, including 5 financially distressed firms, from 2020 to 2022,
the study evaluates the effectiveness of cash flow metrics in identifying
potential bankruptcy.<o></o></span></p><p class="MsoNormal" xss=removed><span lang="EN-ID" xss=removed>The
findings demonstrate that cash flow ratios significantly improve bankruptcy
prediction accuracy. Discriminant function analysis, with a Wilks' Lambda of
0.588 and a Chi-square value of 62.855, confirmed the strong predictive
capacity of cash flow indicators, such as Cash Current Debt Coverage and
Operating Cash Flow Return on Total Assets, the latter proving to be the most
powerful predictor. The cash-based model achieved a classification accuracy of
91.1%, outperforming traditional models like Altman’s (12.19%) and Springate’s
(81.3%), and closely competing with the Kida model (94.3%).<o></o></span></p><p class="MsoNormal" xss=removed><span lang="EN-ID" xss=removed>These
results emphasize the superior predictive power of cash flow metrics in
financial distress scenarios, particularly in dynamic and liquidity-constrained
markets like Egypt. The study contributes to academic literature advocating for
cash-based models and offers practical insights for investors and financial
analysts in developing more robust risk management strategies. By integrating
cash flow indicators, this research provides a more immediate and accurate
assessment of a company’s financial health, enabling better decision-making in
financial risk mitigation.<o></o></span></p><p>
</p><p class="MsoNormal" xss=removed><br></p>
×
Penulis Utama
:
Mahmoud Elsayed Mahmoud Mohamed Youssef
Penulis Tambahan
:
-
NIM / NIP
:
S432302009
Tahun
:
2024
Judul
:
Predicting Bankruptcy And Financial Failure In the Egyptian listed companies: The Importance Of Cash Flow Statements
