Year: 2025
Type: article
Abstract: This research paper has two main objectives. The primary objective was to gain a deeper understanding of the relationship between financial ratios and financial failure, to develop an early warning system for detecting financial distress. The second purpose is to develop a new model, CHENNOUF’s Model, for predicting financial failure. This study examined 18 companies between 2012 and 2024 to test this model. Data were collected over 12 years, and we studied and analyzed the relationship between 75 financial ratios and financial failure in order to build a model to predict the failure of companies before it occurred. This study is based on an analytical method and inferential statistical analysis of the independent variables that define the ratios used in calculating the predicted failure or financial success. We have been working on this model for eight years; we have worked on developing a new model to predict financial failure. We faced several difficulties; however, we incorporated artificial intelligence tools at some points in this research, such as relative weights and correlations. In addition, we used Excel to calculate the bankruptcy index. After examining the problem of this study, we obtained a number of results. Despite the generality and some limitations in the new model, it must be developed by future research. The present paper represents, in our view, one of the most important attempts to address and explain the relationship between financial failure and financial ratios. After examining and analyzing the relationship between financial ratios and financial failure, we obtain the following new model: FS=0.146C+0.103H+0.187E+0.192N1+0.013N2+0.125O+0.138U+0.10F.
DOI: 10.14419/5r41ez59
Authors: Pr. Chennouf Chaaib, Dr. Hanoune Souhiela
Institution: University of Boumerdes
Subfield: Accounting
Domain: Social Sciences
Open Access status: bronze
OpenAlex ID: W4417322768
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