| Research Abstract |
This study presents some empirical results of a study regarding financial ratios as predictors of Japanese corporate failure, evidenced by bankruptcy A few empirical studies of corporate bankruptcy in Japan have been undertaken. However, the results of these studies are not generalizable, due to the limited size of their samples. In contrast, this study proposes a generalizable bankruptcy prediction model based on observations of 686 firms which went bankrupt, and 300 non-bankrupt firms which were extracted from 107, 034 non-bankrupt firms by random sampling, The model proposed in this study is a universal model which is independent of industry and size. The study proves that the model can predict bankruptcy with more than 84% accuracy regardless of industry and size.
This study also proposes a special instruction to amend the financial statements of the firm. That instruction makes the financial statements to reveal the financial position of the firm more accurately.
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