Abstract

This paper uses Multidimensional Scaling (MDS) techniques to explore the relationship between a sample of financial ratios that can be used to describe the health of a firm. It is shown that compared with conventional multivariate techniques, MDS can be used to summarise complex information in an efficient and intuitive way. The technique allows for comparisons to be made between different sets of data and across different time periods. The paper explores time invariant relationships between ratios, and the differences between failed and non-failed firms.

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