Multidimensional Distress Analysis - A Search for New Methodology

Abstract

Economists and management experts had been trying very hard to work out a model which will satisfy performance evaluation and distress analysis of an enterprise or a business unit. Almost all of them tried measuring performance and distress separately. May it be performance evaluation or distress analysis every scholar instead of reconciling the issues went on differentiating. This paper concentrates on distress analysis and tries to establish a new methodology by which both performance and distress position of an enterprise can be measured. This methodology is based on Fuzzy Set Logic and is also best fitted for ordinal data. In this paper we would like to take the privilege of re-writing certain terms like instead of writing distress we prefer to write subaltern and an enterprise or a business unit will be written as a unit. We are more focused in assessing the deprivation of a unit in different dimensions. This enables to analyze the financial position of a unit from different angles. The next question that comes is how much deprivation is compatible for survival? Or how many deprivations in dimensions are feasible? Our paper focuses on this issue by introducing a dual cut-off approach. We tried to look into the finest possible changes that we can make in our model so that it turns multidimensional instead of multivariate and suit to any form of enterprise. In this paper we had tried with equal weights (of dimensions) but it can be used with general weights.

Keywords: Bankruptcy, Deprivation, Dichotomous, Monotonicity, Multidimensional, Subalternity.