Publication Date : 01/07/2005

Author(s) :

Nurizah bt. Noordin.

Volume :
Volume 1

Abstract :

Many researchers have formulated corporate/business failure prediction models utilising financial , ratios. Although there are a few prediction studies on Malaysian firms been documented, there is no evidence on prediction studies conducted on co-operative societies. Therefore, the main purpose of this study is to develop a failure prediction model that can discriminate between failed and non-failed co-operatives. The dataset consists of 30 matched-pair of failed and non-failed co-operatives over the period of 1999-2002. A step¬ wise logistic regression analysis was employed to develop the failure prediction model. The findings indicate that the model correctly and significantly classified 76.67 % and 86.67 % of the failed and non-failed co-operatives respectively three years prior to failure. Five statistically significant predictor variables found were the Cash Flow to Net Worth Ratio, Quick Assets Percent Ratio, Working Capital Percent Ratio, Cash to Current Liabilities Ratio and the Operating Income to Total Asset Ratio. These variables imply that net worth, cashflow, working capital and profits are the important determinants of failure for the co-operative

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