bankruptcy prediction of Small and medium-sized industrial companies in Czechia

 

Jakub Horak

Ing. Jakub Horak, Institute of Technology and Business in Ceske Budejovice, Okruzni 517/10, 37001 Ceske Budejovice, Czech Republic, horak@mail.vstecb.cz

 

Abstract

Managing a company successfully, making the right decisions that ultimately lead to the company's effective functioning requires a comprehensive overview of the company's situation and a continuous assessment of the results of its business activities. The future of each company, as such, is determined mainly by decisions taken by the company management. These decisions should, therefore, be based on up-to-date, objective, and reliable information based on financial analysis. It is a set of methods enabling to determine and consequently influence the position of the company on the market based on the review of its economic situation. This fact was the main reason for choosing this topic, and the aim was to process a database of industrial companies with the necessary data to verify financial health using a bankruptcy model. In the first part, author pay attention to the importance of managers to pay regular attention to the economic situation to avoid problems and possibilities of predicting financial stability as well as authors who deal with this issue in detail. Financial analysis is a useful diagnostic tool that reflects the company's 'financial health' as ​​well as a document recapitulating its results for the period under review, which it then assesses. At the same time, it identifies and analyses the factors that defined them, and then predicts the development to date. The results achieved and summarize it in a proposal of measures to achieve business goals. With the increasing availability of high-performance computing, sophisticated statistical methods have become more widely used in the field of economics and, in the area of financial health predictions. When creating the database and subsequent processing various software for processing the issue was used.

Keywords: prediction model, financial distress, financial health, bankruptcy.