Risk of Business Bankruptcy

Recently, the demand of business owners to ensure the sustainability of their businesses has come to the fore. It results in a focus on identifying the risks of businesses' financial failure. Several prediction models can be applied in a given area. Which of these models is most suitable for Slovak companies? The aim of this chapter was to point out the possibility of applying the DEA method in measuring the financial health of companies and predicting the risk of their possible bankruptcy. The research was carried out on a sample of companies operating in the field of heat supply. The indicators were selected using related empirical studies, a univariate Logit model, and a correlation matrix. In this chapter, two main models were applied: the DEA model and the Logit model. The main conclusion of the paper is that the DEA method is a suitable alternative in assessing businesses' financial health.

The nexus between financial failure and stock prices: Panel Pedroni, Panel Kao and Panel AR DL Co-Integration Tests in Turkey REIT s

In today’s globally competitive environment, companies must keep up with these competitive conditions to be successful. Failure of companies to show the expected financial performance, fulfil their financial obligations, or reach their financial targets is considered a financial failure or bankruptcy risk. Real Estate Investment Companies or Trusts (REICs or REITs) are capital market institutions that qualify as legal entities and are partnerships in a joint-stock company that provides financing to all kinds of real estate or real estate projects and bring together many investors for the desired real estate. REITs are an essential investment choice that continues its rapid development in Turkey. This study aims to examine the relationships between the ZScores calculated by periods of REIT companies traded in Borsa Istanbul between 2010–2019 and the stock price performances. In the study, primarily Altman Z-Score and Springate S-Score values of companies traded in Borsa Istanbul were calculated with the help of financial ratios. Then, Pedroni and Kao panel co-integration analysis and Dumitrescu-Hurlin panel causality analysis were performed. According to the analysis results, there is a long-term relationship between the financial failure scores of REIT companies and their stock prices. However, a causality relationship was found between the series.

Strategic Planning and Crisis Management in Textile Sector in Turkey

Textile industries in Turkey are confronting changing difficulties at various times in this new millennium. Consequently, the world is becoming smaller in operational extent due to progress in information and communications technologies and other modern advances. The fractious cultural movements that induce successive crisis are confronted by organizations that risk their property, and therefore their on-going prospects. These have lately presented themselves in a variety of failures that range from financial failure, epidemics, and other natural calamities; violent actions among staffs and from terrorist factions as well. The private sector is confronting change as varied organizations experienced transitions, as a result of strong competition and compelling technological advances that arise during periods of socio-economic and political progress. Firms do not manage these factors by themselves but will respond to changes if they are required to strategically devise schemes. Planning for crises and responding appropriately to them, will make the firm improves its abilities to survive and thrive. Crisis management focuses on coping with threats, while strategic planning focuses on revealing opportunities. The use of strategic planning in the time of crisis will significantly benefit the firm by having advantages to operate and compete and also to have resilience in dealing with uncertainties. Therefore, to be resilient, firms will need to use intensively strategic planning in turbulent and changing situations in order to survive and thrive. It is the responsibility of managers and leaders in firms to consider all these types as possibilities for crises and have strategic and tactical plans, as a result crises could be rapidly resolved or prevented from happening. Strategic planning is critical to make sure that the textile sector is prepared to meet future difficulties. Modern strategy-oriented planning comprises a lengthy system for realizing a vision or managing future environmental conditions. The processes are neither fully prescriptive nor fully clear. Given this assumption, we typically characterize strategy-oriented planning processes in terms of structured activities that continually cover objectives and mission, survey the competitive environment, analyses strategic options, and coordinate implementing activities throughout an entire organization. Keywords: Strategic Planning, Crisis Management, Textile Sector, Turkey

Non-financial variables related to governance and financial distress prediction in SMEs–evidence from Egypt

PurposeThis study examines the effect of non-financial variables related to governance on the accuracy of financial distress prediction among Egyptian listed small and medium-sized enterprises (SMEs), by using the logistic regression technique.Design/methodology/approachThis study used a sample of 24 Egyptian-listed SMEs in each year, totaling 120 firm observations, of which 25 were classified distressed and 95 of them non-distressed between 2014 and 2018. The variables for the study included five financial variables and thirteen non-financial variables related to governance. The models were developed using financial variables alone as well as combining financial and non-financial variables related to governance.FindingsThe results showed that the model with financial variables had a prediction accuracy of 91.7% , whereas models with a combination of financial and non-financial variables related to governance predict with comparatively better accuracy of 92.7 and 93.6% .Research limitations/implicationsAlthough the results seem to be conclusive, it could be noted that the non-distressed sample was not paired with the distressed sample. Other studies showed that paired samples increase the financial distress prediction rate. Furthermore, due to the small sample size, this study was unable to create a hold-out sub-sample for the accuracy test.Practical implicationsThe proposed distress prediction model for SMEs is effective for stakeholders, including banks and other financial institutions, in the assessment of the credit risk of SMEs. Using such a model, they could better identify SMEs with a higher risk of failure in their lending decisions. Moreover, SME managers' could be interested in using such models as a tool for planning corrective action, in addition to planning and controlling current operations to avoid financial failure in the future.Originality/valueThis study contributes to financial distress prediction literature in different ways. First, few studies were conducted in the area of financial distress among SMEs. Second, neither of these studies was conducted within the Egyptian context, nor any of them had used non-financial variables related to governance in the prediction of financial distress among SMEs.

Financial Distress Analysis Using Altman Z-Score Model In Sharia Banking In Indonesia

This study is conducted to explain the risk of financial failure that may occur in Sharia banking which is known asfinancial distress. Quantitative data in the formof financial ratios fromseveral Islamic banks which are the object of the study were analyzed using Altman Z- score model. After analyzing it, it is known that at Bank BRI Syariah Inc, the company experienced financial distress in 2015, in the following year the company experienced improvementthus in 2016-2019, the company was in good health. Bank BTPN Syariah Inc in 2015-2019 was in a good condition, which means that there was no financial distress or was in a gray area position. Bank Syariah Mandiri Inc experienced financial distress in 2015-2019, which means that during that time the company was in a gray area position

Predicting Insolvency of the Construction Companies in the Creditworthiness Assessment Process—Empirical Evidence from Poland

Prediction insolvency is one of the most important issues during creditworthiness assessment, especially in the turmoil environment. That is why the problem of insolvency and bankruptcy prediction has been the subject of numerous studies focused on its causes, consequences, and prediction. The main goal of the study was to develop a prediction model that can be effectively used in practice to analyze and signal the risk of insolvency and bankruptcy of a construction firms. Also, the research must identify the key factors that would allow for early identification of the symptoms of the upcoming financial failure of companies from a construction sector. To reach the goal of the study discriminant analysis, logistic regression and classification trees were used. The final estimated models included nine variables related to the profitability; revenues; liquidity; asset’s structure; and dynamics of own and foreign capitals, some of which referred to the industry and market situation in a construct sector, which is a novelty compared to previous research. What is more, results show that the method chosen to estimate the insolvency prediction model could have an impact on both partial and general effectiveness in the process of creditworthiness assessment.

Failure threats of insurance companies: A case study of financial environments of Jordan

Insurance firms are known to have unique financial failure characteristics that affect the financial environment of the countries. Therefore, the purpose of this study is to assess the validity of the model used in predicting the financial failures of insurance companies. The model is believed to help in stabilizing the financial environment of the countries by predicting any collapses in the insurance sector. A discriminate regression technique was used to test 28 indicators chosen from 11 financial failure model parameters. 11 parameters of the model are the following: solvency, profitability, operational capabilities, structural soundness, capital expansion capacity, capital adequacy, reinsurance and actuarial issues, management soundness, capital expansion capacity, earnings and profitability, and liquidity. The results of the study proved that 22 variables from 11 parameters were significant; the study also validated the use of the financial failure model as a stable predictor of the financial failure of ASE insurance firms. The stability of the insurance industry is interpreted through the minimum deviation between the real and measured performances. The deviation was present in 3 out of 95 observations, and it affected only 3 firms out of 19, 1 firm out of 3 turned out to be affected by the risker deviation which is the type II error distorted observation. To conclude, the study by mentioning that insurance firms are not threatened by failure or distress and the financial failure model is a valid prediction model.

A New Public Nature: Parks, Plants, and Periodicals In The Nineteenth Century

In 1798, William Curtis published the sixth and last volume of Flora Londinensis, a beautifully coloured catalogue of over 400 plants that grew in London and in its nearby fields. Less than 300 copies were sold, and while the book was considered scientifically important, it was a financial failure (Field 106). Firstly, Flora Londinensis was prohibitively expensive because of its coloured plates, and secondly, the many illustrations of wild grasses and common plants included in the book failed to interest an audience outside of a small group of medical doctors and aristocratic hobby-botanists. The project, however, was not a complete failure for Curtis. While publishing Flora Londinensis, Curtis launched a considerably more successful, similarly formatted periodical for a slightly broader audience called Botanical Magazine. Botanical Magazine featured coloured plates of newly discovered exotic plants that satisfied the tastes of the public. It was published in thin issues containing only three plates each, and at a price of one shilling per monthly issue, Botanical Magazine was affordable enough for more readers to justify paying for the magazine’s exciting, colourfully illustrated content.

A New Public Nature: Parks, Plants, and Periodicals In The Nineteenth Century

In 1798, William Curtis published the sixth and last volume of Flora Londinensis, a beautifully coloured catalogue of over 400 plants that grew in London and in its nearby fields. Less than 300 copies were sold, and while the book was considered scientifically important, it was a financial failure (Field 106). Firstly, Flora Londinensis was prohibitively expensive because of its coloured plates, and secondly, the many illustrations of wild grasses and common plants included in the book failed to interest an audience outside of a small group of medical doctors and aristocratic hobby-botanists. The project, however, was not a complete failure for Curtis. While publishing Flora Londinensis, Curtis launched a considerably more successful, similarly formatted periodical for a slightly broader audience called Botanical Magazine. Botanical Magazine featured coloured plates of newly discovered exotic plants that satisfied the tastes of the public. It was published in thin issues containing only three plates each, and at a price of one shilling per monthly issue, Botanical Magazine was affordable enough for more readers to justify paying for the magazine’s exciting, colourfully illustrated content.