BRI: A New Bankruptcy Risk Index and Its Applicability in Business Management
DOI:
https://doi.org/10.5281/zenodo.14861288Keywords:
Bankruptcy, Liquidity, Decision-making, Judicial Reorganization, BRI, Financial Risk, Liquidity IndicatorsAbstract
Given the rising number of Brazilian companies filing for bankruptcy or seeking judicial reorganization, it is essential for businesses to have access to tools with more accurate methodologies to reflect their liquidity position. This article introduces a new financial indicator (BRI) as a benchmark designed to provide a more accurate solvency analysis, especially for highly leveraged companies. The BRI focuses on the relationship between loans and equity, excluding inventories, and adjusts the analysis to the company's capital structure. It responds promptly to economic fluctuations within the company, allowing for timely and informed decision-making to prevent potential bankruptcies. Based on data from 14 Brazilian companies listed on B3, including seven undergoing judicial reorganization, the BRI demonstrated superior effectiveness compared to traditional indicators. Therefore, BRI is recommended as a preferred metric for liquidity analysis in challenging economic environments.
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