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J. Risk Financial Manag. 2019, 12(1), 15; https://doi.org/10.3390/jrfm12010015

Limitation of Financial Health Prediction in Companies from Post-Communist Countries

Department of Earth sources Management, Faculty BERG, Technical University of Košice, 042 00 Košice, Slovakia
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Received: 29 November 2018 / Revised: 4 January 2019 / Accepted: 15 January 2019 / Published: 18 January 2019
(This article belongs to the Special Issue Applied Econometrics)
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Abstract

The financial health of a company can be seen as the ability to maintain a balance against changing conditions in the environment and at the same time in relation to everyone participating in the business. In the evaluation of financial health and prediction of financial problems of the companies, various indexes are used that can serve as input for expert estimation or creation of various models using, for example, multi-dimensional statistical methods. The practical application of the proper method for evaluation of financial health has been analysed in post-communist countries, since they have common historic experiences and economic interests. During the research we followed up the following indexes: Altman model, Taffler model, Springate model, and the index IN, based on multi-dimensional discrimination analysis. From the research results there is obvious a necessity to combine available methods in post-communist countries and at least to eliminate their disadvantages partially. Experiences from prediction models have proved their relatively high prediction ability, but only in perfect conditions, which cannot be affirmed in post-communist countries. The task remains to modify existing indexes to concrete situations and problems of the individual industries in the chosen countries, which have unique conditions for business making. View Full-Text
Keywords: managing of financial health; risk of bankruptcy; prediction methods; post-communist countries managing of financial health; risk of bankruptcy; prediction methods; post-communist countries
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Csikosova, A.; Janoskova, M.; Culkova, K. Limitation of Financial Health Prediction in Companies from Post-Communist Countries. J. Risk Financial Manag. 2019, 12, 15.

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