Financial Ratios: A New Geometric Transformation

Bahiraie, Alireza and Ibrahim, Noor Akma and Mohd, Ismail and Azhar, A. K. M. (2008) Financial Ratios: A New Geometric Transformation. International Research Journal of Finance and Economics, 20 . pp. 165-171. ISSN 1450-2887

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Official URL: http://www.eurojournals.com/irjfe_20_13.pdf

Abstract

This paper presents a complementary technique for the empirical analysis of risk and bankruptcy using financial ratios. Within this framework, we propose the use of a new measure of risk, which is Share Risk measure, and provide evidence of the extent to which changes in values of this index are associated with changes in each axis values and how this may alter our economic interpretation of changes in the patterns and direction of risk. Solving some methodological problems concerned using financial ratios such as ratio outliers, non-proportionality, non-asymetricity, non-scalicity and non-normal distribution are illustrated. Then results of Multiple Discriminat Analysis (MDA) and Genetic Programming (GP) are compared for common and modified ratios and higher accuracy achieved

Item Type:Article
Keyword:Altman Z-Score model, risk box, risk isoclines, bankruptcy prediction, ratio analysis
Faculty or Institute:Faculty of Science
Publisher:European Journals, Inc.
ID Code:7014
Deposited By: Najwani Amir Sariffudin
Deposited On:01 Jun 2010 03:41
Last Modified:01 Jun 2010 03:48

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