Financial crisis of real sector enterprises: an integral assessment

  • Received November 19, 2019;
    Accepted December 11, 2019;
    Published December 26, 2019
  • Author(s)
    Inna Shkolnyk
    ORCID Researcher ID , Tomasz Pisula , Liliia Loboda ,
    Natalia Nebaba
    ORCID Researcher ID
  • DOI
    http://dx.doi.org/10.21511/imfi.16(4).2019.31
  • Article Info
    Volume 16 2019, Issue #4, pp. 366-381
  • TO CITE АНОТАЦІЯ
  • Cited by
    9 articles
  • 850 Views
  • 242 Downloads

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License

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.

view full abstract hide full abstract
    • Figure 1. Growth rates of the production value of the manufacture of machinery and equipment
    • Figure 2 . Dynamics of the Ukrainian machine builders’ integral values according to models being studied (2014–2018)
    • Figure 3. Dynamics of the taxonomy index change of machine-building enterprises for 2014–2018
    • Table 1. Summary of business assessment results*
    • Table A1. Normalized matrix of indicators of enterprises’ financial capacity for 2014–2018
    • Table B1. The distance between indicators and reference vector of machine-building enterprises of Ukraine for 2014–2018
    • Table C1. An integral indicator of taxonomy of Ukrainian machine-building enterprises for 2014–2018
Related Articles

  • An application of Altman Z-score model to analyze the bankruptcy risk: cases of multidisciplinary enterprises in Vietnam

    Diep Thanh Tung , Vo Thi Hoang Phung doi: http://dx.doi.org/10.21511/imfi.16(4).2019.16
    Investment Management and Financial Innovations Volume 16, 2019         Issue #4         pp. 181-191 Views: 2321 Downloads: 2537 TO CITE АНОТАЦІЯ

    This study applied Altman Z-score model to assess the bankruptcy risk of a set of multidisciplinary enterprises of various types, mainly small and medium enterprises, with data taken from official financial reports of 180 enterprises in Soc Trang province. The binary logistic regression was employed to assess the impact of non-financial and financial factors on the bankruptcy risk of enterprises. The research findings showed that both the non-financial factors such as business area, types and size of the business, the educational level of managers and executors and other characteristics, and the financial factors (indicators) such as earnings before tax, net profit/equity ratio, earnings before interest and tax/total assets ratio, equity/total debt ratio, affect the bankruptcy risk of enterprises. Predicting the bankruptcy risk and measuring its determinants play an important role not only as an effective managing tool of the business, but also as evidence for policymakers to support the sustainable development of business.

  • Impact of determinants of the financial distress on financial sustainability of Ethiopian commercial banks

    Kishor MeherORCID Researcher ID, Henok GetanehORCID doi: http://dx.doi.org/10.21511/bbs.14(3).2019.16
    Banks and Bank Systems Volume 14, 2019         Issue #3         pp. 187-201 Views: 1728 Downloads: 333 TO CITE АНОТАЦІЯ

    The study aims to investigate the impact of determinants of financial distress on financial sustainability of Ethiopian commercial banks. The balanced panel data of 12 commercial banks of Ethiopia have been taken for the study from 2011 to 2017. The research deploys Ordinary Least Square (OLS) Regression Model. The indicators of financial distress are bank’s specific internals and macro-economic factors. The proxies of financial sustainability are Return on Assets, Return on Equity, Financial Stability Index and Bank Soundness. The findings reveal that the Absolute Liquidity Risk and Net Income Growth are found to be positive and significant and Solvency Risk negative and significant in relation to Return on Assets. Asset Quality is found to be positive and significant and Solvency Risk negative and significant with respect to Return on Equity. The Asset Quality and Net Income Risk are positive and significant and Solvency Risk is negative and significant with relation to the Financial Stability Index. Absolute Liquidity Risk and Liquidity Risk are positive and significant and Credit Risk negative and significant with Bank Soundness. Free Cash Flow and Net Income Growth are essential for enhancing Return on Assets and Bank Soundness, and managing equity within the prudential norms could bring forth short-term financial sustainability of commercial banks. By lowering provisioning of loan loss, Growth in Net Interest Income and managing Solvency Risk could ensure financial stability to the banks, which in turn leads to financial sustainability. The study reveals that financial sustainability of banks is insulated from the exposures of systematic risks originating from macroeconomic factors.

  • The place and perspectives of Ukraine in international integration space

    Vitalina BabenkoORCID Researcher ID, Maryna PasmorORCID , Juliia Pankova , Mykhailo Sidorov doi: http://dx.doi.org/10.21511/ppm.15(1).2017.08
    Problems and Perspectives in Management Volume 15, 2017         Issue #1         pp. 80-92 Views: 1536 Downloads: 246 TO CITE АНОТАЦІЯ

    The resulting indexes for integration processes state development analysis were formed. The integral indexes illustrating integration state were calculated on the basis of member countries of BRICS and Ukraine. It provided the possibility to evaluate socioeconomic state of the countries from the point of view of international integration and create integration processes development scenarios. The strategic directions of integration processes development for Ukraine and member countries of BRICS were formed.

Download Preview
Close
Investment Management and Financial Innovations
Investment Management and Financial Innovations