Financial Risk Measurement of Small and Medium-sized Companies Listed in Bombay Stock Exchange

Abstract

The present study investigates the financial risk factors of SMEs listed in Bombay stock exchanges of India for the period from 2001 to 2011. Financial risk factors are important due to its disorderly character within an organization. Moreover small and medium sized companies are depicted to financial risk from diverse features of the overall economy. This paper is based on secondary data obtained from the annual financial statements of BSE in India. In the course of analysis, descriptive statistics, correlation statistics and regression analysis with Alexander Bathory model have been designed. Empirical result shows that financial risk is negatively related with debt-structure, asset-liability ratio, inventory turnover, fixed asset turnover and accounts receivables turnover but positively related with current ratio, quick ratio, net profits and net assets ratio.