Understanding The Role Of Financail Ratios In Predicting Firm’s Financial Failure: A Conceptual Paper

Abstract

Over the recent decades, prediction of the financial failure of firms has been dealt with by researchers and economists worldwide. Previous studies have selected various variables to predict financial failure such as corporate governance variables, macroeconomic variables, accounting data, classic cross-sectional statistical methods, and selected traditional and learning algorithms methods. However, this conceptual paper ensures on dominating of financial ratios as important variables for financial failure. Besides, the conceptual paper is recommending future researchers for applying an empirical study in Algeria, more exactly at corporate complexes of the hydrocarbon sector.