International Journal of Industrial Engineering and Management

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Vol. 6 No. 2 (2015)
Original Research Article

Growth Patterns of Small Manufacturing Firms Before Failure: Interconnections with Financial Ratios and Nonfinancial Variables

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  • Oliver Lukason,
  • Erkki K. Laitinen,
  • Arto Suvas
Oliver Lukason Faculty of Economics and Business Administration, Tartu University

Bio
Erkki K. Laitinen Faculty of Business Studies, Accounting and Finance, University of Vaasa

Bio
Arto Suvas Faculty of Business Studies, Accounting and Finance, University of Vaasa

Bio

Published 2015-09-30

Keywords

  • bankruptcy,
  • failure process,
  • financial ratios,
  • growth patterns,
  • managers’ characteristics

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Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

Abstract

This study focuses on the pre-failure growth in total assets, debt and sales of bankrupted manufacturing firms. Based on a sample of 128 Estonian firms, it is shown that two distinct growth patterns can be outlined. When the first pattern shows a gradual decline, then the other characterizes a more eclectic growth behavior. Several classical financial ratios have significantly different values through the established two patterns. Managers’ characteristics do not vary among the established patterns.

 

Article history: Received (02.12.2014); Revised (22.05.2015); Accepted (21.06.2015)  

FULL TEXT ARTICLE (PDF)