International Journal of Industrial Engineering and Management
Volume 6, Issue 2, June 2015, PP 59-66
UDK: 005.915

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

Oliver Lukason, Erkki K. Laitinen, Arto Suvas


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.


Key words: bankruptcy, failure process, financial ratios, growth patterns, managers’ characteristics
Article history: Received (02.12.2014); Revised (22.05.2015); Accepted (21.06.2015)
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