Forecasting Bankruptcy Oil and Gas Companies Using Neural Networks

Abstract

Authors: Yelena Y. Makeeva National Research University The Higher School of Economics len-makeeva@yandex.ru

A O Bakurova National Research University The Higher School of Economics

Accurate evaluation of company’s financial situation and forecast of its future operational activity is quite substantial especially today, when the economy is partly stable. Current research is dedicated to the problem of bankruptcy driving factors in oil and gas sector that is known as one of the safest and solid in view of the industrial specific. However, there are a lot of small firms that are not supported by government or mother-companies. It’s more difficult for such firms to maintain their sustainable development and financial stability. That is why huge economic shocks result in the default of these companies.In this particular paper we consider several financial coefficients belonging to 5 groups such as profitability, liquidity, leverage and turnover - as the main determinants of financial distress. We found out that profitability is the most significant variable among the others. This conclusion coincides with those of the majority of the researches.