Application of ANNs and Dynamic Modeling for SMEs

Abstract

Indonesian SMEs Garment Manufacturers (ISGMs) has become the main contributor
to Indonesia’s Gross Domestic Product for the last ten years. At the same time, the
State Minister for Cooperatives and SMEs received many reports on the discontinued
of the ISGMs. Currently, the ISGM managers have lack of management capabilities.
This study focus on the use of artificial neural networks (ANNs) that is capable
of interpreting the results of financial statements analysis (FSA). ANNs rules are
encoded implicitly using an algorithm for automatic learning. Furthermore, the study
also will investigate how to support the ISGMs by using pattern recognition in dy-
namic modelling (DM). The combination of ANNs and DM may support the ISGMs
in (1) analysing the firm’s performance, (2) interpreting the results of FSA, and (3)
providing a simulation on what will happen if something occurred in the business.
Keywords: financial statement analysis, ANNs, dynamic modelling, business,
garment, SMEs