Predicting Financial Distress of the Corporate Sector in GCC Region

Abstract

A corporation is deemed to have financial troubles if it is likely to be financially distressed. The capacity to foresee uncontrolled phenomena helps decisions by enhancing knowledge of the upcoming circumstance. As a result, anticipating bankruptcy is critical to avoid it, especially at an early stage. Experts have developed models that can assist in determining whether a corporation is financially sound or in a financial crisis. This study used financial statements to determine which factors influence the financial hardship of the business sector in the GCC region. As the data show, certain criteria were more important than others, although this differed by country. However, one key component was shown to be shared by the countries, and that is leverage. To summarize, the following criteria are reliable predictors of financial difficulty in the GCC region: Asset Turnover, Cash Ratio, ROA, Leverage, Liquidity, Magin, Net Income, and EQ Offer.