Estimating profitability using a neural classification tool

Abstract

The analysis of the private sector, mainly composed of micro, small and medium-sized business, briefly known as the SMEs sector, reveals many competitive aspects but also weaknesses, while the economic and social importance of the sector makes it imperative to elaborate specific development and consolidation strategies and policies. In order to establish such strategic directions, based on data on a significant volumes of Romanian SMEs (7902 entries) and on information provided by annual balance sheets, we established connections between results indicators (profit, measured as the rate of commercial profitability) and various causal variables by using a neural classification tool, which was built in accordance to testing and validation requirements in order to obtain consistent results.