Financial Competency Assessment Model

Abstract

relevant sections. After a brief literature survey the proposed financial assessment procedure with structure is explained. The proposed financial assessment approach is tested on a real life enterprise in order to define its financial competency. The literature reveals that the financial ratios are generally used when analyzing financial competency of firms seeking for credit from especially the banks. Ratios are the results of the relationships between many indicators. As every ratio assesses a different aspect of business, various assessment models can be established by using statistical methods such as discriminant analysis Some of those are summarized below. Çağlar [6] evaluated a variety of scoring systems and provided a model for the prediction of the probability that enterprises especially Small and Medium Enterprises (SMEs) credited would or would not fall into financial difficulties. In this study, a number of financial indicators were used to predict the enterprises that were likely to fall into financial difficulties, with many variables known as 'dependent' and 'independent'. A logistic regression method a scoring model was created and tested with the chi-squared test. An enterprise is categorized in terms of credit eligibility. A similar study is carried out by Bodur and Teker [7], a scoring model with five general parameters