Bankruptcy prediction of industry-specific businesses using logistic regression

This paper compares the accuracy of Business Failure Prediction (BFP) for Australian companies by conducting binary logistic regression analysis on companies that haven’t been allocated to an industry and the same companies categorized under each industry they subscribe to. An analysis of financial ratios for the Australian marketplace using various variables for an experiment data that includes hundreds of existing and bankrupt businesses across five sectors over a 12 month period from 2013-2014 is presented in the paper. There are many gains from the study, including the potential to aid the economy as a whole so as not to fall into a recession or slump as a result of increased business failure.The BFP model in this paper acquires the prospective to momentously aid various parties in the economy– from shareholders to government agencies; thus leading to the improvement of the economy in general.There is adequate evidence to prove that bankruptcy in companies can be more accurately predicted by allocating companies to their respective industry, as opposed to a “one model fits all” approach which has been used commonly throughout many of the literature