Prediction of financial failure: A study on Turkey's electricity distribution sector

In this thesis, an early warning model is introduced in order to predict financial failure of companies operating in Turkey?s electricity distribution sector. Tariffs of electricity distribution companies are determined by the regulatory body as they are natural monopolies. Financial viability of these companies which is directly related to the elements of tariffs is important for the stability of the system. In addition, after determining the tariff elements, the regulatory body must monitor whether distribution companies are financially sound. In this thesis, the author is attempting to establish financial failure predicting model and a set of indicators for the companies operating in Turkey?s electricity distribution sector with the help of 18 financial and non-financial ratios derived from companies? 2009, 2010 and 2011 financial statements and use of multi-varied statistical prediction methods such as factor analysis, discriminant analysis and logistic regression analysis. Keywords 1. Financial failure 2. Multi-varied statistical prediction methods 3. Logistic regression 4. Discriminant analysis 5. The electricity distribution sector