Financial crisis of real sector enterprises: an integral assessment
Open Access
- 26 December 2019
- journal article
- Published by LLC CPC Business Perspectives in Investment Management and Financial Innovations
- Vol. 16 (4), 366-381
- https://doi.org/10.21511/imfi.16(4).2019.31
Abstract
Successful crisis resolution of the enterprise depends heavily on its timely detection, which is facilitated by the use of forecasting models. This allows understanding the scale of the problems in a timely manner and developing the appropriate measures, applying various financial mechanisms to prevent it, and in case of occurrence, reducing the amount of losses. In this context, it is important to choose the most optimal informational model that would provide the most objective forecasts, considering the financial activity peculiarities of the analyzed enterprise. Given a wide list of models that predict the financial crisis, there is a need to analyze and select the most accurate model for enterprises in the real economy. Ten Ukrainian machine builders are used to assess the bankruptcy probability using the most popular models; a taxonomic analysis was carried out, which allows systematizing a large amount of data and analyzing their impact on enterprise development. An integral index was determined, which allowed predicting the financial performance dynamics. For each enterprise, ten indicators were used characterizing their financial state for the period 2014–2018. It is substantiated that the selected models differ from each other by the set of initial data and the number of coefficients from four to seven. It is also determined that the efficient use of studied models is quite different; so when choosing a model to predict the bankruptcy probability, it is necessary to consider the peculiarities of the enterprise’s production activity, the accuracy in creating the financial statements and many other factors, including the presence of company’s shares in circulation at the stock market. It is worthwhile to use a taxonomic analysis to make a comprehensive comparison of the enterprise financial state and to substantiate the final choice of the bankruptcy forecasting model.Keywords
This publication has 20 references indexed in Scilit:
- A comparative analysis of the effectiveness of corporate bankruptcy prediction models based on financial ratios: Evidence from ColombiaJournal of International Studies, 2018
- A fifty-year retrospective on credit risk models, the Altman Z -score family of models and their applications to financial markets and managerial strategiesJournal of Credit Risk, 2018
- Economic and financial determinants of firm bankruptcy: evidence from the French food industryReview of Agricultural, Food and Environmental Studies, 2016
- Financial Distress Prediction in an International Context: A Review and Empirical Analysis of Altman's Z‐Score ModelJournal of International Financial Management & Accounting, 2016
- A Statistical Model of Financial Risk Bankruptcy Applied for Romanian Manufacturing IndustryProcedia Economics and Finance, 2012
- Assessing How Bankruptcy Prediction Models Are EvaluatedJournal of Business & Economics Research (JBER), 2011
- Comparing the performance of market-based and accounting-based bankruptcy prediction modelsJournal of Banking & Finance, 2008
- PREDICTING BANKRUPTCY FOR FIRMS IN FINANCIAL DISTRESSJournal of Business Finance & Accounting, 1990
- FINANCIAL RATIOS, DISCRIMINANT ANALYSIS AND THE PREDICTION OF CORPORATE BANKRUPTCYThe Journal of Finance, 1968
- Financial Ratios As Predictors of FailureJournal of Accounting Research, 1966