Accounting Tools - From Predictors of Industrial Sickness to Predictors of Sickness in Public Enterprises

Abstract

the paper first reviews studies and experiences in Indio to delilleate the cOllcept of "Industrial Sick)enterprises alld to develop predictive tools (through accol/flting) for identifyillg "sick enterprises- ineluding legislative enactments provided for their mOllitorillg. It tllell reviews the overall researeh previollsly ldenakell to allalyze "business failures" through ratio analysis alld predictive tools. All attempt is thell made to apply some of these ratios 10 the financial operatiolls of selected Ethiopian manufacturing enterprises, to allalyze the illcipiellf ''sickness'' that may prevail. 17,e study cOl/eludes that the ''filial/dol healtlr" of th ese public enterprises is highly questionable, as they are found to be heavily lmdercapitalized, facillg liquidity problems alld operating ollly 011 the upper pan of the balance sheet. 77ltse factors endanger their continuing viability.