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INVESTOR RESPONSE TO CHANGES IN CORPORATE LIQUIDITY

INVESTOR RESPONSE TO CHANGES IN CORPORATE LIQUIDITY The liquidity component from financial analysis has been found to be an important predictor of a firm's financial well being. Altman's credit worthiness and financial viability system uses, among six other financial measures, the current ratio as a liquidity discriminant variable. The Altman system itself has had considerable success in the prediction of corporate bankruptcy. Altman reported that the system correctly predicted bankruptcy 93 of the time using financial statements one period prior to failure and 87 with financial statements two periods prior. The Value Line Investment Survey also contains a measure of financial strength that incorporates a liquidity measure. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Managerial Finance Emerald Publishing

INVESTOR RESPONSE TO CHANGES IN CORPORATE LIQUIDITY

Managerial Finance , Volume 15 (6): 4 – Jun 1, 1989

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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
0307-4358
DOI
10.1108/eb013632
Publisher site
See Article on Publisher Site

Abstract

The liquidity component from financial analysis has been found to be an important predictor of a firm's financial well being. Altman's credit worthiness and financial viability system uses, among six other financial measures, the current ratio as a liquidity discriminant variable. The Altman system itself has had considerable success in the prediction of corporate bankruptcy. Altman reported that the system correctly predicted bankruptcy 93 of the time using financial statements one period prior to failure and 87 with financial statements two periods prior. The Value Line Investment Survey also contains a measure of financial strength that incorporates a liquidity measure.

Journal

Managerial FinanceEmerald Publishing

Published: Jun 1, 1989

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