FINANCIAL INDICATORS AS PREDICTORS OF ILLIQUIDITY

Dejan Jovanović (), Mirjana Todorović () and Milka Grbić ()
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Dejan Jovanović: University of Kragujevac, Faculty of Economics, Serbia.
Mirjana Todorović: University of Kragujevac, Faculty of Economics, Serbia.
Milka Grbić: University of Kragujevac, Faculty of Economics, Serbia.

Journal for Economic Forecasting, 2017, issue 1, 128-149

Abstract: The main objective of this study is the development of the model for predicting illiquidity, i.e. identification of financial indicators on the basis of which one can predict illiquidity. The research focus is on large companies in the Republic of Serbia. Bearing in mind the results of previous research and the assumptions underlying the logistic regression, the paper relied on logistic regression for drawing conclusions. For each of the 426 companies included in the sample, based on data from financial statements, financial ratios were calculated in respect of: liquidity, activity, solvency, profitability, and effectiveness, which were used as independent variables in the study. The research results show that in the prediction of illiquidity of large companies in Serbia, from a total of 23 financial indicators included in the model, the following distinguish themselves as significant - capital turnover ratio, inventory turnover ratio, fixed-asset turnover ratio, real asset coverage ratio, net profit ratio, return on total assets, return on equity, and effectiveness of main business activity.

Keywords: prediction; illiquidity; insolvency; financial indicators; large companies; developing countries (search for similar items in EconPapers)
JEL-codes: G01 G33 M21 (search for similar items in EconPapers)
Date: 2017
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