DETERMINANTS OF CASH FLOWS TOWARDS FINANCIAL DISTRESS PREDICTION AMONG MANUFACTURING COMPANIES IN MALAYSIA
Authors:
Nur Hafizah Roslan, Rohani Md Rus & Nabilah Rozzani*
Abstract:
This study is conducted to evaluate the relationship between liquidity (WCTA, CACL), leverage (TDTA, CLNW), profitability (EBTA, ROE, ROA), BTMV, sales growth, and cash flow (CFFTL, CFITL, CFOTL) and the corporate financial distress among listed manufacturing firms in Malaysia. This study uses a sample from 2001 to 2014. Logistic regression is used to evaluate the relationship between the variables in the three models. In Model 1, the result shows that the WCTA, TDTA, EBTA, ROA, BTMV, and CFOTL have a significant relationship with corporate financial distress. In Model 2 when only cash flows variables are included, the results show that CFITL and CFOTL are negatively significant with financial distress. In Model 3 when all variables are included in the analysis, the results remain similar as in Model 1. In Model 4 when the stepwise logit regression is used, the results are similar to in Model 1.