Predicting methods of financial distress for retails stemming from high returns

Uncertainties surrounding reverse logistics create the possibility that the retailer may be strained in meeting financial distress. The current research offers a Markov chain approach to build a random fluctuation model for the early-warning index and analyzes the financial risks stemming from retail reverse logistics activities. The worsened probability for the early-warning index can be inferred. This enables the retailing firm policy-makers to discover and eliminate the operation and financial risk early and effectively prevents the risk to be worsened to the financial distress. Finally managerial recommendations for avoiding financial distress stemming from reverse logistics activities are provided.