Purpose - Through this Masters dissertation, the researcher aims to understand the use of bankruptcy rates for the assessment of suppliers and the effect of sector-specific ratios on the accuracy of bankruptcy rate.
Methodology - Through the literature review the researcher gained an enormous amount of knowledge regarding the prediction of bankruptcy and general methods to construct bankruptcy rates. Also, the researcher conducted a survey to which 24 respondents answered questions regarding suppliers and bankruptcy rate.
Findings – Bankruptcy rate is an easy and quick to use tool that supply department of companies could use in order to predict the failure of one or more of their suppliers. By using specific ratio of the sector in which the company and its suppliers are operating, the efficiency of the bankruptcy rate can be increased.
Limitations – The model constructed in this dissertation is limited to the food industry and will not have the same results if applied on another sector.
Practical implications – The model developed in this dissertation can be directly used by companies operating in the food industry as well as the method used to construct the model if companies are willing to calculate their own bankruptcy rate.
Value of paper - This dissertation aims to add value to any companies operating in the food