Applying the Discriminant Function (analysis) for Going- Concern Forecasting of Corporations by Some Variables of Basic Financial Statements (Balance Sheet, Income Statement and Statement of Cash Flow)

Subject Areas : Management Accounting

یحیی حساس یگانه ¹ (ندارد)
محمد صیادی ² (عهده دار مکاتبات)

Received: 2011-09-11 Accepted : 2011-10-09 Published : 2011-09-23

Keywords: Discriminant Analysis (Discrim, Going- Concern, Listed&#x0D, &#x0D, Corporations, Delisted Corporations,

Abstract :

Discriminant analysis (function) is one of the best instruments to recognizevariables affecting to the going concern. This paper seeks to discriminate failed andnon-failed corporations using discriminant analysis (function) by some variable ofbasic financial statements. Sample includes 51 failed and 51 non-failed corporations.In discriminant analysis, wilks' lambda determines affecting variables todiscriminate of groups. Then, the discriminant function is getting out. This function isused to discriminate groups to failed and non-failed corporations. The test resultsproved to be extremely accurate in predicting going concern correctly in 77 percent ofall firms in the failed and non-failed groups assigned to their actual classification.Conclusively, The results shows that retained earnings (x1) (from balance sheet)and operational income (x2) (from income statement) are the two most influentialvariables in going concern prediction.