scholarly journals The usage of economic profit and other forms of profit as a part of prediction models to forecast the financial stability of business entities in the context of globalization

2021 ◽  
Vol 92 ◽  
pp. 02025
Author(s):  
Dusan Karpac ◽  
Iveta Sedlakova
Keyword(s):  
Financial Stability ◽  
Prediction Models ◽  
Value Added ◽  
Global Market ◽  
Financial Health ◽  
Continuous Change ◽  
Economic Profit ◽  
Business Entities ◽  
Global World ◽  
A Company

Research background: Predicting financial health of a company is in this global world necessary for each business entity, especially for the international ones, as it´s very important to know financial stability. Forecasting business failure is a worldwide known term, in a global notion, and there is a lot of prediction models constructed to compute financial health of a company and, by that, state whether a company inclines to financial boom or bankruptcy. In the current global world of uncertainty and continuous change, it is in each business’s interest to improve its performance. Businesses have to adapt to changing market conditions and keep moving to maintain their, either local or global, market position. In the past, entities preferred to increase primary accounting profit forms. The global modern goal of enterprises, value creation, is achieved through the concept of economic profit. Purpose of the article: The aim of this article was to find out the connection between two very important terms for the global economy, namely prediction models and economic profit. Methods: We focused on the research of both areas and looked for a common connection through how often different forms of profit, and especially the form of economic profit, are used in individual prediction models among the examined sample. Findings & Value added: The output of the whole article is the finding the division of the use of economic and accounting profit in the sample of models and the importance of economic profit for mathematical constructions of prediction models.

scholarly journals Prediction of Financial Health of Business Entities of Selected Sector Using Balance Analysis II. by Rudolf Doucha and Verification of Its Predictive Ability through ROC

2021 ◽  
Vol 91 ◽  
pp. 01006
Author(s):  
Dusan Karpac ◽  
Viera Bartosova
Keyword(s):  
Financial Management ◽  
Financial Stability ◽  
Prediction Models ◽  
Predictive Ability ◽  
Business Failure ◽  
Financial Health ◽  
Balance Analysis ◽  
Business Entities ◽  
The Given ◽  
A Company

Forecasting business failure is a worldwide known term, in a global notion, and there is a lot of prediction models constructed to compute financial health of a company and, by that, state whether a company inclines to financial boom or bankruptcy. A healthy financial management of a business entity is very important for the proper operation of the business, and it is therefore very important to know how to assess financial health and to anticipate possible problems that will be easier to eliminate in advance. Globalized prediction models compute financial health of companies, but the vast majority of models predicting business failure are constructed solely for the conditions of a particular country or even just for a specific sector of a national economy. Predictive models can indicate whether an entity tends to prosper or bankruptcy, and so we can assess the financial health of the business. This paper provides a description of the balance analysis II. by Rudolf Doucha, discusses its application to a sample of 266 Slovak subjects and points to its prediction in the given field. The verification of the ability to forecast bankruptcy or financial stability has been evaluated through ROC analysis.

scholarly journals The verification of prediction and classification ability of selected Slovak prediction models and their emplacement in forecasts of financial health of a company in aspect of globalization

2020 ◽  
Vol 74 ◽  
pp. 06010
Author(s):  
Dusan Karpac ◽  
Viera Bartosova
Keyword(s):  
Financial Stability ◽  
Roc Analysis ◽  
Prediction Models ◽  
Predictive Ability ◽  
Business Failure ◽  
Financial Health ◽  
Prediction Ability ◽  
Global World ◽  
A Company ◽  
International View

Predicting financial health of a company is in this global world necessary for each business entity, especially for the international ones, as it´s very important to know financial stability. Forecasting business failure is a worldwide known term, in a global notion, and there is a lot of prediction models constructed to compute financial health of a company and, by that, state whether a company inclines to financial boom or bankruptcy. Globalized prediction models compute financial health of companies, but the vast majority of models predicting business failure are constructed solely for the conditions of a particular country or even just for a specific sector of a national economy. Field of financial predictions regarding to international view consists of elementary used models, for example, such as Altman´s Z-score or Beerman´s index, which are globally know and used as basic of many other modificated models. Following article deals with selected Slovak prediction models designed to Slovak conditions, states how these models stand in this global world, what is their international connection to the worldwide economies, and also states verification of their prediction ability in a specific sector. The verification of predictive ability of the models is defined by ROC analysis and through results the paper demonstrates the most suitable prediction models to use in the selected sector.

scholarly journals Family Businesses in Global Economy and Evaluating their Financial Health Using Bankruptcy Models

2021 ◽  
Vol 129 ◽  
pp. 03031
Author(s):  
Maria Truchlikova
Keyword(s):  
Financial Distress ◽  
Global Economy ◽  
Agricultural Sector ◽  
Prediction Models ◽  
Predictive Accuracy ◽  
Value Added ◽  
Business Environment ◽  
Bankruptcy Prediction ◽  
Family Businesses ◽  
Financial Health

Research background: Predicting and assessing financial health should be one of the most important activities for each business especially in context of turbulent business environment and global economy. The financial sustainability of family businesses has a direct and significant influence on the development and growth of the economy because they still represent the backbone of the economy and play an important role in national economies worldwide accounting. Purpose of the article: We used in this article the financial distress and bankruptcy prediction models for assessing financial status of family businesses in agricultural sector. The aim of the paper is to compare models developed by using three different methods to identify a model with the highest predictive accuracy of financial distress and assess financial health. Methods: The data was obtained from Finstat database. For assessing the financial health of selected family businesses bankruptcy models were used: Chrastinova’s CH-Index, Gurcik’s G-Index (defined for Slovak agricultural enterprises) and Altman Z-score. Findings & Value added: This article summarizes existing models and compares results of assessing financial health of family businesses using three different models.

scholarly journals Bankruptcy prediction in Visegrad group countries using multiple discriminant analysis

Equilibrium ◽  
2018 ◽  
Vol 13 (3) ◽  
pp. 569-593 ◽  
Author(s):  
Tomas Kliestik ◽  
Jaromir Vrbka ◽  
Zuzana Rowland
Keyword(s):  
Discriminant Analysis ◽  
Prediction Models ◽  
Value Added ◽  
Bankruptcy Prediction ◽  
Net Income ◽  
Multiple Discriminant Analysis ◽  
Financial Situation ◽  
The Future ◽  
A Company ◽  
Visegrad Group

Research background: The problem of bankruptcy prediction models has been a current issue for decades, especially in the era of strong competition in markets and a constantly growing number of crises. If a company wants to prosper and compete successfully in a market environment, it should carry out a regular financial analysis of its activities, evaluate successes and failures, and use the results to make strategic decisions about the future development of the business. Purpose of the article: The main aim of the paper is to develop a model to reveal the un-healthy development of the enterprises in V4 countries, which is done by the multiple discriminant analysis. Methods: To conduct the research, we use the Amadeus database providing necessary financial and statistical data of almost 450,000 enterprises, covering the year 2015 and 2016, operating in the countries of the Visegrad group. Realizing the multiple discriminant analysis, the most significant predictor and the best discriminants of the corporate prosperity are identified, as well as the prediction models for both individual V4 countries and complex Visegrad model. Findings & Value added: The results of the research reveal that the prediction models use the combination of same financial ratios to predict the future financial development of a company. However, the most significant predictors are current assets to current liabilities ratio, net income to total assets ratio, ratio of non-current liabilities and current liabilities to total assets, cash and cash equivalents to total assets ratio and return of equity. All developed models have more than 80 % classification ability, which indicates that models are formed in accordance with the economic and financial situation of the V4 countries. The research results are important for companies themselves, but also for their business partners, suppliers and creditors to eliminate financial and other corporate risks related to the un-healthy or unfavorable financial situation of the company.

scholarly journals The Concept of an Imperial City in The Modern Global World

2021 ◽  
Vol 92 ◽  
pp. 06022
Author(s):  
Yulia Maltseva
Keyword(s):  
Multidisciplinary Approach ◽  
Mutual Influence ◽  
Value Added ◽  
Global Market ◽  
Historical Background ◽  
Global Competitiveness ◽  
Financial Investments ◽  
Global World ◽  
The City ◽  
Scientific Growth

Research background: The author analyzes the phenomenon of cultural identity of the city and its cultural and economic aspects which allows us to create the concept of the Imperial city, and analyze its relationship with its own historical background and ideas about the global city. Structural analysis of modern ideas about the Imperial city allows us to ensure a strong urban brand and influences its global competitiveness. Purpose of the article: The article is devoted to the problem of forming strong brands of certain territories, in particular, Imperial cities, and their impact on the competitiveness of the region. Methods: The multidisciplinary approach to the analysis of a chosen phenomenon combining economic-statistical and cultural-philosophical methods to assess the mutual influence of the city’s globality and its Imperia concept on the formation of its distinctive ecnomically strong brand. Findings & Value added: The analysis showed that a new understanding of the phenomenon of the Imperial city, strengthening its brand, increasing recognition in the world and close ties with cultural dominants allows the Imperial cities to attract significant financial investments and improve their competitive position at the global market. As a scientific growth, the author can consider the influence of the Imperial city concept on the structure of the formation of a successful urban brand of a territory. The author proposes the new methodology for assessing the brand value of the Imperial City.

scholarly journals Association between values of the Index IN 99 and the EVA indicator

2011 ◽  
Vol 59 (2) ◽  
pp. 25-34
Author(s):  
Michaela Beranová ◽  
Marcela Basovníková ◽  
Dana Martinovičová
Keyword(s):  
Pearson Correlation ◽  
Statistical Significance ◽  
Economic Value ◽  
Value Added ◽  
Economic Value Added ◽  
Financial Health ◽  
Value Based Management ◽  
Business Entities ◽  
Good Differentiation ◽  
The One

The modern indicators of the performance of business entity are based on an economic conception of profit. It means that alternative costs and risks are taken into account in construction of these indicators. Moreover, the modern indicators would also enable to clearly and digestedly identify the links on each level of management, and therefore to support the value-based management. The one of these modern indicators is Economic Value Added. This indicator has been introduced by Stewart Stern & Co. in the early nineties. As some Czech authors state (e.g. Synek, 2007), domestic alternative of the EVA indicator are the IN indexes which has been developing since the middle of the nineties as overall indexes of company’s financial health especially because the indexes coming from abroad had not a good differentiation ability with regard to specifics of the Czech economic environment. The objective of this article is to define the relations between the values of EVA indicator and the values of the index IN 99 while the analysis is focused on agricultural companies of mixed farming. The authors base their work on differences in constructions of these two indicators and on ­differences in interpretations of their results. Primarily, basic correlation of values of these indicators has been observed. The calculation of Pearson correlation coefficient has been applied on the set of fifty business entities, and the calculated result of 0.669 shows relatively stronger linear dependence. Consequent test has verified a statistical significance of this dependence. Then in this article, the authors are focused on causations of this dependence which is rather strong in spite of a different logic of these two indicators. Other consequences of overall view on company’s economic performance are discussed in the article as well.

scholarly journals MANAGEMENT OF THE COMPANY'S FINANCES WITH THE OBJECTIVE OF ESTABLISHING SUSTAINABLE CONTINUOUS LIQUIDITY AND FINANCIAL STABILITY UNDER GLOBAL PROCESSES

2021 ◽  
Vol 14 (28) ◽  
Author(s):  
Slobodan Subotić ◽  
Goran Mitrović ◽  
Vitomir Starčević
Keyword(s):  
Financial Management ◽  
Financial Stability ◽  
Global Market ◽  
Global Changes ◽  
Successful Management ◽  
Current Form ◽  
Financial Position ◽  
Doing Business ◽  
A Company ◽  
Adequate Management

Globalization, in its current form, represents a new dynamic complex, especially when it comes to its implications for the economy and business of economic entities. It manifests its implications not only through competition, but also through economic growth and development. A modern company should provide adequate management that is able to create and develop comparative advantages that will enable it to be actively involved in global market flows. Global changes have conditioned a new way of doing business, and thus a significant turn in the approach to financial management. This has led to changes in the basic economic settings and criteria for successful management and business. The financial position of a company is one of the indicators of the company's success to function in a global and turbulent market environment. Starting from this fact, a practical treatment of this problem and analytical indicators of the financial position of the three dependent production companies operating within the MH Elektroprivreda Republike Srpske will be done. The aim of the research is to show the extent to which the management of these companies has accepted the requirements of global economic processes and adapted their business to them. That is, whether financial management provides a satisfactory level of liquidity and financial stability of these three companies.

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

2019 ◽  
Vol 12 (1) ◽  
pp. 15 ◽  
Author(s):  
Adriana Csikosova ◽  
Maria Janoskova ◽  
Katarina Culkova
Keyword(s):  
Prediction Models ◽  
Financial Health ◽  
Practical Application ◽  
Economic Interests ◽  
Prediction Ability ◽  
Expert Estimation ◽  
High Prediction ◽  
The Individual ◽  
Communist Countries ◽  
A Company

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.

scholarly journals Holistic view on corporate bankruptcy causes: systematization of causes and requirements to building bankruptcy prediction models

2019 ◽  
Vol 2019 (4) ◽  
pp. 120-129
Author(s):  
Tomas Kliestik
Keyword(s):  
Market Economy ◽  
Prediction Models ◽  
Bankruptcy Prediction ◽  
Negative Consequences ◽  
Financial Health ◽  
Holistic View ◽  
Wide Range ◽  
Business Entities ◽  
A Chain ◽  
The Impact

The article presents the research of bbusinesses’ life cycle as complex organisms that do not exist in isolation, but in mutual interaction with other subjects operating in the national economy, other businesses, non-financial or financial corporations, government agencies or customers and households. The essence of the crisis as the motive force of any market economy is revealed. The causes of bankruptcy of enterprises are considered. It has been stated that bankruptcy of the enterprise can result in a chain reaction with negative consequences for all economic entities. Every economy in the world (not only market economy) is confronted with failures or bankruptcy of business entities. There exist a variety of forms, manifestations and consequences of business failures. There has been substantiated the importance of the research, the essentiality of a detailed analysis of methods of bankruptcy prediction models, i.e. determining probable development of the corporate principles in the coming years. In the centrally planned economies, the state is responsible for all the consequences; in the market economy they directly affect all entities interrelated with the enterprise. Each group involved applies a wide range of tools, algorithms and methods, but their aim is identical: to predict the future development of the corporate financial health. There appear questions about termination of activity of a particular enterprise due to its future bankruptcy, shutting down because of bad decisions, or the impact of endogenous and exogenous factors. Development of the algorithms and methods is not possible without a detailed, almost holistic knowledge of the causes of corporate bankruptcies. A methodological toolkit based on numerous studies of specialists has been developed for building bankruptcy models.

scholarly journals Investors Perception Towards Investment With Reference To Modern And Other Traditional Tools

2016 ◽  
Author(s):  
Bhavesh Kumar Rathod ◽  
V Asha ◽  
J Gajendra Naidu
Keyword(s):  
Business Performance ◽  
Economic Value ◽  
Investment Decisions ◽  
Value Added ◽  
Economic Value Added ◽  
Traditional Methods ◽  
Economic Profit ◽  
Modern Methods ◽  
A Company

There are many modern and traditional methods in valuing the performance of the company among them EVA, CVA are modern methods where as EPS, ROI, ROE etc. are some of the traditional methods. modern and traditional methods are not only used to check the performance of a company but it also used in investment decisions by the investors. Stern Stewart, managing partner of M/s Stern Stewart & Co. introduced a modified concept of economic profit in 1990 in the name of Economic Value Added (EVA) as measure of business performance and CVA is only a cash consideration in EVA. In this paper an attempt is made to study which method is used by the investors while taking the investment decisions i.e. traditional methods are modern methods. 100 respondents (Investors) are questioned and collected their views, we are assuming that there is no impact of traditional or modern methods while taking investment decisions by the investors.

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