EFFECTIVENESS OF FINANCIAL RATIOS IN PREDICTING FINANCIALLY DISTRESSED COMPANIES AMONG PN17 AND REITS INDUSTRY IN MALAYSIA
Keywords:
Logit model, Business Forecasting, Distressed Companies, Financial RatiosAbstract
Malaysia-Real Estate Investment Trusts (M-REITS) plays an important role as a diversified investment vehicle among renowned investors’ portfolios. To ensure REITs sustainability, a bankruptcy model is incorporated to study the early warning signal. This paper attempts to study a sample of 14 M-REITS companies and 16 PN17 listed companies. The prediction tool used is the Multiple
Discriminant Analysis (MDA) and the Logit model for sample acquired between 2015 – 2019. The result shows that, the Logit model with Activity and Cash Flow ratios found to be significantly predicted financially distressed companies than MDA’s predicted ratios.
