Articlegold2019

Financial crisis of real sector enterprises: an integral assessment

Inna O. Shkolnyk · Tomasz Pisula · Liliia Loboda · Natalia A. Nebaba

12 citations0/0 files storedInvestment Management and Financial Innovations

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Financial Distress and Bankruptcy Prediction Financial Analysis and Corporate Governance Corporate Insolvency and Governance

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.

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References

1968FINANCIAL RATIOS, DISCRIMINANT ANALYSIS AND THE PREDICTION OF CORPORATE BANKRUPTCY 1966Financial Ratios As Predictors of Failure 2016Financial Distress Prediction in an International Context: A Review and Empirical Analysis of Altman's Z‐ Score Model 2007Comparing the performance of market-based and accounting-based bankruptcy prediction models 1983Corporate financial distress : a complete guide to predicting, avoiding, and dealing with bankruptcy 1990PREDICTING BANKRUPTCY FOR FIRMS IN FINANCIAL DISTRESS 1984Empirical models for the monitoring of UK corporations 2018A fifty-year retrospective on credit risk models, the Altman Z -score family of models and their applications to financial markets and managerial strategies

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