Bankruptcy prediction models traditionally focused on financial ratios, but a new model incorporates non-financial data like payment history and industry to more accurately predict bankruptcy one year in advance. The study analyzed 1,000 small businesses, 200 of which filed for bankruptcy, and found the new model predicted bankruptcy with around 80% accuracy compared to 70% for traditional ratio-based models.
Bankruptcy prediction models traditionally focused on financial ratios, but a new model incorporates non-financial data like payment history and industry to more accurately predict bankruptcy one year in advance. The study analyzed 1,000 small businesses, 200 of which filed for bankruptcy, and found the new model predicted bankruptcy with around 80% accuracy compared to 70% for traditional ratio-based models.
Bankruptcy prediction models traditionally focused on financial ratios, but a new model incorporates non-financial data like payment history and industry to more accurately predict bankruptcy one year in advance. The study analyzed 1,000 small businesses, 200 of which filed for bankruptcy, and found the new model predicted bankruptcy with around 80% accuracy compared to 70% for traditional ratio-based models.