Judgmental Approach To Forecasting Bankruptcy

JUDGMENTAL APPROACH TO FORECASTING BANKRUPTCY By Corolyn E. Clark , Paul L. Foster, Karen M. Hogan and George H. Webster. The K&P (judgmental) model is superior to the Altman model in identifying firms that are likely to fail ... uses fourteen firms from three different industries in this study ... predicts the status of 25 ongoing pharmaceutical firms with the K&P model. Academicians and practitioners alike are continually looking for new and improved methods of financial analysis as an aid in business decision making. One of the important areas of financial analysis is the prediction of financial failure which leads to bankruptcy. Most predictive models dealing with this topic are quantitative in nature and use past financial data to predict the financial failure of a firm. As an alternative, Koundinya and Puri developed a judgmental model for predicting bankruptcy. The objective of this article is to compare the results of the Koundinya & Puri (hereafter K&P) bankruptcy prediction model with a well recognized quantitative model. K & P MODEL The K&P proposed model relates the prediction of bankruptcy with certain financial risk factors. We here compare the results of this model ...