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Comparison of the Results of a Data Envelopment Analysis Model and Logit Model in Assessing Business Financial Health

Department of Accounting and Controlling, Faculty of Management, University of Prešov, Konštantínova 16, 080 01 Prešov, Slovakia
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This paper is an extended version of our paper published in the 27th Interdisciplinary Information Management Talks, 4–6 September 2019, Kutná Hora, Czech Republic.
Information 2020, 11(3), 160; https://doi.org/10.3390/info11030160
Received: 31 January 2020 / Revised: 9 March 2020 / Accepted: 11 March 2020 / Published: 17 March 2020
(This article belongs to the Special Issue Digital Transformation in Economy, Business, Society and Technology)
This paper focuses on business financial health evaluation with the use of selected mathematical and statistical methods. The issue of financial health assessment and prediction of business failure is a widely discussed topic across various industries in Slovakia and abroad. The aim of this paper was to formulate a data envelopment analysis (DEA) model and to verify the estimation accuracy of this model in comparison with the logit model. The research was carried out on a sample of companies operating in the field of heat supply in Slovakia. For this sample of businesses, we selected appropriate financial indicators as determinants of bankruptcy. The indicators were selected using related empirical studies, a univariate logit model, and a correlation matrix. In this paper, we applied two main models: the BCC DEA model, processed in DEAFrontier software; and the logit model, processed in Statistica software. We compared the estimation accuracy of the constructed models using error type I and error type II. The main conclusion of the paper is that the DEA method is a suitable alternative in assessing the financial health of businesses from the analyzed sample. In contrast to the logit model, the results of this method are independent of any assumptions. View Full-Text
Keywords: bankruptcy; BCC model; data envelopment analysis; financial health; logit bankruptcy; BCC model; data envelopment analysis; financial health; logit
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Horváthová, J.; Mokrišová, M. Comparison of the Results of a Data Envelopment Analysis Model and Logit Model in Assessing Business Financial Health. Information 2020, 11, 160.

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