Modelling Corporate Sector Distress in India

Manjusha Senapathi and Saptarshi Ghosal

Working Papers from eSocialSciences

Abstract: The paper attempts to formulate a model to predict corporate financial distress of non-government non-financial public limited companies and estimate distressed bank debt due to the sample companies for the period 2006-07 to 2013-14. The model estimates probability of a company being financially distressed in the following year using the multivariate logistic regression based on three financial ratios viz., long term liabilities to total assets, operating profits to total liabilities, and current assets to current liabilities. The model was tested for some stressed industries/companies and was found to capture the underlying distress. Distressed bank debt for the sample companies was found to be increasing since 2011-12. [RBI WPS (DEPR): 10 / 2016].

Keywords: assets; operating profits; liabilities; current assets; current; industries; companies; distress; non-government; non-financial; debt; probability; financially distressed (search for similar items in EconPapers)
Date: 2016-12
Note: Institutional Papers
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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