Corporate Bankruptcy Prediction Using a Logit Model: Evidence from Listed Companies of Iran

Abstract

4 Abstract: One of the factors that can help decision-making process on investments are existence appropriate tools and models to assess the situation and financial condition of organizations that among the most important toolscan be noted to corporate bankruptcy prediction models. Accordingly in this paper weattempted to predict the bankruptcy of companies using the Logit model. Therefore, we selected a sample of 49 bankrupt companies and 49 non-bankrupt companies for the years 2005 to 2007. In order to designing a model was used 19 finance ratio. Based on research results, Logit model with variables of net profit to total assets ratio, the ratio of retained earnings to total assets and debt ratiohave more power to predict corporate bankruptcy in Iran.