The methodical approach of bankruptcy probability estimation in an anti-crisis management system of enterprise
DOI:
https://doi.org/10.15549/jeecar.v6i2.332Keywords:
anti-crisis management, insolvency, bankruptcy risk, financial standing, financial stability.Abstract
The article presents the methodical approach to anti-crisis management system development for metallurgical enterprises of Ukraine, which is aimed at bankruptcy probability estimation based on financial indicators. The methodical approach is implemented by means of defining the indicators of the enterprise bankruptcy; integrated solvability index calculation; integrated solvability index limits definition by the class of enterprise depending on the risk of the enterprise bankruptcy. The elaborated methodical approach is the instrument for preventive anti-crisis management at the enterprises of Ukraine due to its direction at determining early marks of insolvency. Approbation results for the elaborated methodical approach at metallurgical enterprises testified high bankruptcy risk caused by the enterprise loss-making activity, which has a negative impact on the current financial standing and poses the potential threat of bankruptcy resulting from the lack of self-finance sources, thus, reducing the enterprise financial stability and creditworthiness.
References
Altman, E., & Hotchkiss, E. (2006). Corporate Financial Distress and Bankruptcy: Predict and Avoid Bankruptcy, Analyze and Invest in Distressed Debt. Hoboken: John Wiley and Sons, Ltd.
Antunes, F., Ribeiro, B., & Pereira, F. (2017). Probabilistic modeling and visualization for bankruptcy prediction. Applied Soft Computing, 60, 831-843. DOI: https://doi.org/10.1016/j.asoc.2017.06.043
Azayite, F., & Achchab, S. (2016). Hybrid Discriminant Neural Networks for Bankruptcy Prediction and Risk Scoring. Procedia Computer Science, 83, 670-674 DOI: https://doi.org/10.1016/j.procs.2016.04.149
Chan-Lau, J. (2006). Fundamentals-based estimation of default probabilities: a survey Retrieved January 20, 2019 from http://ideas.repec.org/p/imf/imfwpa/06-149.html.
Dai, X., & Li, S. (2018). Cross-modal deep discriminant analysis. Neurocomputing, 314, 437-444. DOI: https://doi.org/10.1016/j.neucom.2017.09.059
Fulmer, J.G.Jr. et al. (1984). Bankruptcy Classification Model for Small Firms. Journal of commercial Bank Lending, 25-37.
Hamilton, D.T., Sun, Zh., & Ding, M. (2011). Through-the-Cycle EDF Credit Measures. Moody's Analytics Methodology. Retrieved January 20, 2019 from http://www.moodysanalytics.com/~/media/Microsites/ERS/2011/through-cycle-EDF/MoodysAnalytics_Through-the-Cycle%20EDF%20Measure% 20Methodology%20Overview.pdf
Hosaka, T. (2019). Bankruptcy prediction using imaged financial ratios and convolutional neural networks. Expert Systems with Applications, 117, 287-299. DOI: https://doi.org/10.1016/j.eswa.2018.09.039
Jabeur, S. (2017). Bankruptcy prediction using Partial Least Squares Logistic Regression. Journal of Retailing and Consumer Services, 36, 197-202. DOI: https://doi.org/10.1016/j.jretconser.2017.02.005
Ko?išová, K., & Mišanková, M. (2014). Discriminant Analysis as a Tool for Forecasting Company's Financial Health. Procedia - Social and Behavioral Sciences, 110, 1148-1157 DOI: https://doi.org/10.1016/j.sbspro.2013.12.961
Menke, W. (2018). Factor Analysis. Geophysical Data Analysis (Fourth Edition), 207–222. DOI: https://doi.org/10.1016/B978-0-12-813555-6.00010-1
Neskorodeva, I., & Pustovgar, S. (2015). An Approach to Predicting the Insolvency of Ukrainian Steel Enterprises Based on Financial Potential. Journal of Eastern European and Central Asian Research, 2 (2), 33-43. DOI: https://doi.org/10.15549/jeecar.v2i2.104
Pereira, J., Basto, M., & da Silva, A. (2016). The Logistic Lasso and Ridge Regression in Predicting Corporate Failure. Procedia Economics and Finance, 39, 634-641 DOI: https://doi.org/10.1016/S2212-5671(16)30310-0
Rousseau, R., Egghe, L., & Guns, R. (2018). Statistics. Becoming Metric-Wise, 67-97. DOI: https://doi.org/10.1016/B978-0-08-102474-4.00004-2
Springate, G.L.V. (1978). Predicting the Possibility of Failure in a Canadian Firm. Canada: Simon Fraser University.
Toffler, R., & Tishaw, H. (1977). Going, going, gone – four factors which predict. Accountancy, March, 50-54.
Wilson, T. (1997). Portfolio Credit Risk: part I. RiskMagazine, September, 111-117.
State Statistical Service of Ukraine. (2019). Statistical information January 25, 2019 from http://www.ukrstat.gov.ua/
Koval, L. (2008). Diagnostics and Prevention of Agricultural Enterprises Bankruptcy. Lviv.
On Approval of the Concept of National Security Provision in the Financial Sphere. (2012). Ordinance of the Cabinet of Ministers of Ukraine of 15.08.2012 ? 569-?. Retrieved January 25, 2019 from https://zakon.rada.gov.ua/laws/show/569-2012-%D1%80.
Tereshchenko, O., & Pavlovskyi, S. (2016). To the Issue of Improving Enterprise Anti-Crisis Management Financial Mechanism. Finances of Ukraine, 6, 108-122.
Tereshchenko, O., & Stetsko, M. (2017). Diagnostics of Enterprise Insolvency as the Technique for Financial Decision Making Support. Effective Economy, 3. Retrieved January 25, 2019 from http://www.economy. nayka.com.ua/?op=1&z=5521.
Downloads
Published
How to Cite
Issue
Section
License
The JEECAR journal allows the author(s) to hold the copyright and publishing rights of their own manuscript without restrictions.
This journal applies the Creative Attribution Common License to works we publish, and allows reuse and remixing of its content, in accordance with a CC-BY 4.0 license.
Authors are free to: Share — copy and redistribute the material in any medium or format and Adapt — remix, transform, and build upon the material for any purpose, even commercially.
Under the following terms: Attribution — You must give appropriate credit, provide a link to the license, and indicate if changes were made. You may do so in any reasonable manner, but not in any way that suggests the licensor endorses you or your use.
No additional restrictions — The author may not apply legal terms or technological measures that legally restrict others from doing anything the license permits.
The JEECAR Journal is committed to the editorial principles of all aspects of publication ethics and publication malpractice as assigned by the Committee on Public Ethics.