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Open AccessArticle

Tax Arrears Versus Financial Ratios in Bankruptcy Prediction

Faculty of Economics and Business Administration, University of Tartu, Liivi 4, 50409 Tartu, Estonia
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J. Risk Financial Manag. 2019, 12(4), 187; https://doi.org/10.3390/jrfm12040187
Received: 4 November 2019 / Revised: 3 December 2019 / Accepted: 7 December 2019 / Published: 11 December 2019
This paper aims to compare the usefulness of tax arrears and financial ratios in bankruptcy prediction. The analysis is based on the whole population of Estonian bankrupted and survived SMEs from 2013 to 2017. Logistic regression and multilayer perceptron are used as the prediction methods. The results indicate that closer to bankruptcy, tax arrears’ information yields a higher prediction accuracy than financial ratios. A combined model of tax arrears and financial ratios is more useful than the individual models. The results enable us to outline several theoretical and practical implications. View Full-Text
Keywords: bankruptcy prediction; tax arrears; payment defaults; financial ratios bankruptcy prediction; tax arrears; payment defaults; financial ratios
MDPI and ACS Style

Lukason, O.; Andresson, A. Tax Arrears Versus Financial Ratios in Bankruptcy Prediction. J. Risk Financial Manag. 2019, 12, 187.

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