Early Warning Indicators of Business Failure

Abstract

Only recently have academicians and practitioners realized the importance of a systematic analysis of business failures. The authors develop a failure process model that can help managers to understand and predict failure. Causes and symptoms of failure are reviewed briefly as methods of analyzing failures. A parsimonious financial corporate failure model based on symptoms of failure (performance indicators) is developed and used to predict the business failure of retail establishments over the five-year period prior to the actual failure.