For this reason Horrigan in his wor

For this reason Horrigan in his work tried to gather the scattered data and provide a framework synthesis of the empirical basis for the analysis based on financial ratios, highlighting the issue of non comparability due to the application of different accounting standards. Within this division Horrigan stated probably the most used in those days and emphasized that it would be very useful to explore the question of their ability to predict bankruptcy, which should be possible because the computers would allow the use of non aggregated data and more sophisticated statistical techniques, as well as the development of cash flows ratios. Furthermore, there is another fundamental reason for determining the usability of financial ratios, and that is - it is inconceivable that the accounting data can be analyzed without having to transform the financial ratios." (Horrigan, 1965) The reason is because the nominal amounts in the financial reports haven't often been used for the analysis within the organization if it operates in the economy with a high rate of inflation.