Graphical Data Representation in Bankruptcy Analysis

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Operating profit margin (K2)

Fig. 1. A classification example. The boundary between the classes of solvent and
insolvent companies was estimated using DA and logit regression (two indistinguish-
able linear boundaries) and an SVM (a non-linear boundary).

Fig. 2. One year cumulative PDs evaluated for several financial ratios on the Ger-
man Bundesbank data. The ratios are net income change, K21 (gray), net interest
ratio, K24 (red), interest coverage ratio, K29 (pink) and logarithm of total assets,
K33 (blue). The k-nearest-neighbours procedure was used with the size of the win-
dow being around 8% of all observations. The total number of observations is 553500.