On the industry effects on the classification patterns of financial ratios

Teppo Martikainen, Kari Puhalainen and Paavo Yli-Olli

Scandinavian Journal of Management, 1994, vol. 10, issue 1, 59-68

Abstract: This paper reports an empirical investigation of the industry effects on the interrelationships between financial ratios. Factor and transformation analysis have been used for this purpose. The data used in the study consist of 74 failed and 74 "non-failed" firms from three industries. Significant industry effects on the interrelationships between financial ratios are found. The results indicate that the accuracy of multivariate models based on financial ratios may be significantly reduced if these effects are not taken into account.

Keywords: Accounting; financial; ratios; industry; transformation; analysis; corporate; failure (search for similar items in EconPapers)
Date: 1994
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