Break-Up Analysis: A Method to Regain Trust in Business Transactions

Bruno Maria Franceschetti (), Claudia Koschtial () and Carsten Felden ()
Additional contact information
Bruno Maria Franceschetti: University of Macerata
Claudia Koschtial: Technische Universität Bergakademie Freiberg
Carsten Felden: Technische Universität Bergakademie Freiberg

A chapter in Accounting Information Systems for Decision Making, 2013, pp 203-219 from Springer

Abstract: Abstract The financial crisis resulted in a loss of trust; not only within the investment or banking sector, but in general between creditors and debtors, because many organizations faced insolvency. Such a financial situation can even result in a company’s bankruptcy. Therefore it is necessary to get a realistic understanding of the solvency or the possible insolvency of a company. The support of a decision on a debtor’s creditability is not yet sufficiently provided by the most prominent method (Altman’s Z’’-score). The paper presents a procedure called Break-Up Analysis (BUA). It helps to decide on the solvency of a company. The comparison of the BUA to Altman’s Z’’-score shows an improvement of the identification of solvent and insolvent companies by 22 %. The BUA enables herewith to regain trust in business transaction by not identifying only the insolvent companies but the solvent ones as well.

Keywords: Solvency; Bankruptcy; Bankruptcy prediction model; Financial data analysis; Break-Up analysis; Z-score (search for similar items in EconPapers)
Date: 2013
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:lnichp:978-3-642-35761-9_12

Ordering information: This item can be ordered from
http://www.springer.com/9783642357619

DOI: 10.1007/978-3-642-35761-9_12

Access Statistics for this chapter

More chapters in Lecture Notes in Information Systems and Organization from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().