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Financial Distress and Bankruptcy Prediction in Subsidiaries of the Largest Business Holding in Iran Using the Model of Altman

Author Affiliations

  • 1Department of Business Management, Branch, Shahid Beheshti University (SBU), Tehran, IRAN
  • 2 Management Science, IMI University, Tehran, IRAN
  • 3 Master of Executive Management Business Administration, Science and research Ayatollah Amoli Branch, Amol, Mazandaran, IRAN
  • 4Department of Business Management, Science and Research Branch, Islamic Azad University, Tehran, IRAN

Res. J. Recent Sci., Volume 2, Issue (8), Pages 40-46, August,2 (2013)

Abstract

Various factors including management performance or business features may lead to recession and bankruptcy of a company. The important issue is that bankruptcy does not happen abruptly and unexpectedly, but it is predictable from before using some criteria or symptoms. It can be so helpful in preventing bankruptcy or doing corrective actions. Symptoms like intensive reduction of revenues, negative flow of liquidity, increased current debts of current assets and difficulty in access to new financial sources can be considered as some of signs for future bankruptcy. The present study, using a comprehensive approach, reviews different models of predicting bankruptcy, analyzes financial forms of sample companies and studies the situation of the companies about probability of bankruptcy.

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