Aspects Concerning the Determination of Bankruptcy Risk by Solvency and Liquidity Ratios in the Companies Listed on the Bucharest Stock Exchange (original) (raw)
Related papers
Annals - Economy Series, 2017
In the present, risks are always present, but this thing doesn’t mean that the society can’t carry on the economic activity in conditions of a favorable result. Through the risks to which the entity is subject, an important place is the risk of bankruptcy. The level of this risk can be determined by using of large number of liquidity and solvability indicators on the base of dates from the balance of accounts and from the profit and loosing cont. In this paper is analyzed by comparison the risk of bankruptcy of companies listed at Bucharest Stock Exchange from three sectors of activity: production, commerce and tourism. It is analyzed the evolution of score Z, indicator representative for the risk of bankruptcy, on a period of 14 years (2002-2015), enough for every society and sector. The sample of 15 enterprises has been formed on basis of information available for this research. After analysis of results, we notice that the best results concerning the risk of bankruptcy are record...
The Problem of Bankruptcy in Listed Companies
EUROPEAN RESEARCH STUDIES JOURNAL, 2020
The paper presents an investigation of the bankruptcy of companies listed on the Warsaw Stock Exchange using the Fundamental Power Index in dynamic terms (FPI). Design/Methodology/Approach: The methodology of the Fundamental Power Index (FPI) was used to assess bankruptcy. In general, the essence of the indicator is a synthetic assessment of the company's fundamental strength. The indicator can take high and low values. The appearance of low levels of the ratio for the company is not favourable and indicates a problem in the financial standing area. As a consequence, the level of the ratio may signal a risk of bankruptcy. The article also discusses the legal grounds for bankruptcy of companies in Poland and selected EU countries. Findings: The results of the conducted research indicate that FPI may be a useful tool of early warning against bankruptcy. The dynamic approach to the index allowed for the assessment of the fundamental strength of the companies in the period of five years. At the same time, the level of the index indicated the risk of bankruptcy. The basis for the construction of the ratio was the financial data from the financial statements of the examined entities. In particular, information on financial ratios from the following groups was used: liquidity, profitability, debt and operational efficiency. Practical Implications: The implementation of the indicator concerns many areas, including investing, assessment of companies or the stock market. In the event of bankruptcy, information about the level of the ratio may support the management process of the company and early response of managers to avoid bankruptcy (e.g. by introducing recovery or restructuring programs). For the investor, the information about the low level of the ratio is a signal for actions related to risk management. Originality/Value: The results of the study reflect the applicability and effectiveness of the proposed indicator. Consequently, the fundamental strength index may constitute an alternative to the existing methods of assessing the bankruptcy process in enterprises.
2011
In global economy as well as in the Romanian economy, labeled as competitive, the risk is there that the existence and viability of a business’ present and future resu lts might be put under the threat of unpredictable events. Assessing and evaluating the financial state of health of a company through a financial-accounting diagnosis requires assessing the risks g oing along with the company activity, some of which may point out its fragility or vulnerability, and others may prefigure bankruptcy or insolvency that may threat its survival and continuity. The target of analysing the entity’s economic activity is to check out and demonstrate that the level of the operational risk is determined by costs achieved and their structure, fixed and variable. Financial risk is analysed as profit sensibility, the risk level being determined by financial costs.
A Statistical Model of Financial Risk Bankruptcy Applied for Romanian Manufacturing Industry
Procedia Economics and Finance, 2012
The risk of bankruptcy was and is the subject of many research studies aiming to identify the time of bankruptcy, competing factors to achieve this state, the main financial criteria which best expresses this orientation, the bankruptcy, etc. Although there are models that have proved their viability over time, we note that the developed models are successfully applied in space and time in which there were created. In this article we tried to develop a statistical model for prediction of bankruptcy risk, available for the companies which operate in the Romanian space. Thus, we applied a multidimensional analysis technique, namely Principal Component Analysis on two groups of companies in the manufacturing sector, during the period 2000-2011, also including the global financial crisis impact. The financial crisis is the main factor that influenced g impact on the company's financial condition. The two groups of companies are selected from among the listed companies, which are operating in the manufacturing area of activity, respectively one group consists in the listed companies and another group consists in firms that will be unlisted in the next years. The statistical model can be successfully used to predict the risk of bankruptcy for companies which activate in manufacturing area of activity in Romania.
Equilibrium, 2012
The financial crisis undoubtedly exerted much pressure on the companies operating inPoland. Thus, it is important to undertake researches that reveal the paths and strength of financial crisis transmission with regard to the business entities. This paper presents partial results of the research dedicated to the analysis of the impact of financial crisis on the financial situation of companies operating in the Silesian Voivodship. It analyzes and discusses the general changes of the two sets of financial ratios that inform about the general financial condition of the business: the financial balance and the level of bankruptcy risk. Scientific aim: The paper aims at analyzing the changes of the financial situation and bankruptcy risk of a population of Silesian companies with regard to the improvement or deterioration. In particular, it aims at reflecting the differences visible with the application of aggregated data characterizing the population of Silesian companies as compared to ...
Models for the Assessment of the Entreprise Bankrupty Risk in Crisis Situations
2009
The complex nature of the aspects involved by bankruptcy risk also explains the diversity of the diagnosis and analysis models, of which we mention: the liquidity- chargeability analysis, the functional analysis, the rate analysis, the financial flow analysis, etc, therefore, bankruptcy risk analysis can be developed in a static manner, using the analysis of the balance sheet financial balances, or in a dynamic manner, using the analysis of the flows depicted in the financing chart. Based on specialty literature, this paper will outline the national and international contributions in the field of discriminatory analysis and bankruptcy prediction, also known as the so-called score functions. Several researchers and financial organisations have been concerned with developing a bankruptcy risk prediction method, starting from a small group of rates, closely linked to the health or vulnerability of the enterprise. The procedure used is the statistic technique of discriminatory analysis ...
Assessing bankruptcy risk for Romanian metallurgical companies
Metalurgija, 2014
In this paper it propose to evaluate the bankruptcy risk of the companies which operate within the Romanian metallurgy industry, over the period 2001-2012, highlighting the impact of Ā nancial crisis on this sector. The bankruptcy risk assessing b y Altman M odel gives us a pessimistic view of the Romanian metallur gical industr y. A little mor e optimistic perspective on the risk of bank ruptcy in Romanian metallur gy is pr ovided by the C onan Holder M odel according to which the best two Romanian metallurgical companies traded at BSE (ALR and ART) face a low risk of bankruptcy. According to this model the Ā nancial crisis seems to have aff ected the Ā rst two Romanian metallurgical companies only in 2009, then in the following years the bankruptcy risk degrease, achieving satisfactory levels.
Diagnostic Model of the Risk of Bankruptcy
Procedia Economics and Finance, 2014
In Romania, on the background of the economic crisis and globalization of markets, the external and internal environment becomes more and more hostile and as such, many commercial societies, can record financial disturbances or even bankruptcy. Ignoring drawn signals (the level of some economic-financial indicators) following a correct diagnosis can lead to degradation of economic and financial condition of the company entering insolvency. The study conducted by the author, on a guided sample of small companies in Romania aimed to develop a model of financial diagnosis, which can quickly reflect, based on the level of a score, the probability of the insolvency or bankruptcy of the company.
Methods of Analysis and Evaluation of the Bankruptcy Risk
2007
The profitableness of an enterprise cannot be appreciated irrespective of the risks wherewith this is confronting, risks corresponding to economic and financial profitableness: the economic risk, carried out into organizational lever effect and the financial risk, in terms of the negative lever. The financial lever deepens the economic risk, turning into a greater vulnerability of treasury (to the outgoings concerning