Predicting Financial Failure using the financial indicators "An empirical study on the services sector companies listed on the Palestine Stock Exchange"

Authors

Dr. Khaled Hasan Zubdeh, Al Quds Open UniversityFollow

Abstract

The objective of this study was to examine the predictability of companies' failures by developing a mathematical model consisting of a set of financial ratios. In order to reach precise scientific results, the statistical analysis (SPSS) program was used and the financial data of the companies were subjected to multiple discrimination analysis for the fiscal years 2010-2017. The study was applied to the companies of the services sector listed on the Palestine Stock Exchange, that are ten companies out of 48 public companies listed on the Palestine Stock Exchange in all sectors. The researcher reached to a mathematical model consisting of six financial ratios that can be applied to predict the failure of these companies in the future. The accuracy of this proposed model is 80% in the first and second year before the failure, and 100% in the third and fourth year also before failure. One of the most important findings of this study is the need to adopt different models of prediction of failure and to apply them by the companies of various sectors listed on the financial market. Finally, companies and financial markets should adopt different analytical methods and include these results in the annual reports published by these companies.

Recommended Citation

Zubdeh, Dr. Khaled Hasan (2021) "Predicting Financial Failure using the financial indicators "An empirical study on the services sector companies listed on the Palestine Stock Exchange"," Journal of the Arab American University مجلة الجامعة العربية الامريكية للبحوث: Vol. 7: Iss. 1, Article 4.
Available at: https://digitalcommons.aaru.edu.jo/aaup/vol7/iss1/4