ABSTRACT
This chapter describes measures used in economics and finance studies. In terms of the UK, A. W. Goudie and G. Meeks examined the effects of macroeconomic changes on the working capital funds flows of failing companies. Metals and engineering, textiles and transport and communications all suffered substantial numbers of corporate bankruptcies in the 1980 and 1990 recessions, but in relative terms textiles fared far worse in the early 1980s. A firm's vulnerability is just as likely to be associated with its location as with its industry membership. This is recognised by the fact that bankruptcy identification models have been developed for a variety of countries. Efforts have been made to assess the style and content of the chairmen's reports. Empirical evidence suggests that all these can be used as indicators to help discriminate between failing and non-failing firms, although it is clear that in many cases their incidence is irregular.
