Distribution properties of contractors' financial ratios

The application of financial ratios for evaluating the performance of construction contractors has received some considerable attention in academic research [..continues]. The central theme of this paper is that, although this approach may be correct mathematically, it only goes to support the view· that financial ratios are essentially not characterised by normal distributions. Identifying the underlying distributions that characterise these financial ratios should-lead to a more rational approach for developing efficient ratio models. To do this, the paper presents an approach for investigating the distributional properties of the ratios, with the view to utilising the identified distributions for estimating failure prediction models.