Financial failure and factors affecting financial failure an application on retail trade sector

Firms are in the process of global competition in a global economic environment and aim to be financially successful in order to survive in this process. "Financial failure" jeopardizes the mission of continuity of companies. Each firm carries out "Financial Failure Risk Estimation" studies with the aim of avoiding financial failure and makes its moves with an effort to prevent financial failure. In the study, firstly, the definition of financial failure was emphasized, and the conceptual framework of financial failure was tried to be explained. Information is given about the studies on financial failure and financial failure prediction models. In the research part of the study, an application was made on the factors affecting the risk of financial failure. In order to determine the degree of impact of financial failure risk determinants on companies being included in the "financial failure" category, 4-year data (2017-2020) of 8 companies traded in Borsa Istanbul and operating in the retail trade sector were used. For the financial unsuccessful classification of companies, Altman Z Score Model values for the mentioned years are considered. On behalf of the determinants of the risk of financial failure, the financial ratios of the companies were discussed; 7 financial ratios, including profitability ratio, leverage ratio, size, asset growth ratio, liquidity ratio, stock ratio, and market value, were examined. Obtained data: Pooled Least Squares method, Fixed Effect Model, Random Effect Model methods were used by using the "R" Programming Language. The effectiveness of the Random Effect Model has been determined. As a result of the findings, the most effective determinant of financial failure risk was accepted as " liquidity ratio ".