CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
US English

What is bankruptcy prediction?

Bankruptcy prediction definition

This is an area of accounting and financial research that explores the ability to predict financial distress and bankruptcy in public firms. This has been analysed since 1932, when Paul J. FitzPatrick published his famous study in The Certified Public Accountant.

Where have you heard about bankruptcy prediction?

The 1932 FitzPatrick report studies 20 pairs of companies matched by industry, size and date, one failed and one surviving. He clarified the trends in ratios and his findings were essentially a complicated multiple variable analysis. It's now common practice to include statistical analysis along with ratio.

What you need to know about bankruptcy prediction.

Bankruptcy prediction is essential for public companies. The modern methods in practice take into account judgements, company age, payment history from creditors and bad press. These predictions are particularly relevant for creditors and investors, who will be looking to assess whether a company will go bankrupt. They are also very useful for traders with securities in assessed public companies.

Related Terms

Latest video

Latest Articles

View all articles

Still looking for a broker you can trust?

Join the 630,000+ traders worldwide that chose to trade with

1. Create & verify your account 2. Make your first deposit 3. You’re all set. Start trading