Business Failure Prediction: The Case of Moroccan SMEs

This research examines the financial challenges faced by small and medium enterprises (SMEs) in Morocco, which play a vital role in the country’s economy. However, many SMEs struggle with financial instability, leading to high failure rates. This study focuses on identifying key factors that contribute to business failure. A quantitative approach was applied, utilizing discriminant analysis to assess the differences between successful and failing SMEs. The findings reveal that liquidity and profitability are critical to distinguishing between the two groups, with failing companies showing weaker performance in these areas. This research highlights the importance of financial management practices in mitigating the risk of failure in Moroccan SMEs. It emphasizes the need for effective financial strategies, particularly in managing liquidity and improving profitability, to ensure the sustainability and success of SMEs in the Moroccan context.