Assessment of financial health of Slovak family businesses using models predicting financial distress

Mária Trúchliková,D Hrušovská,M Trúchliková,M Raková,M Kmety Barteková

doi:10.1051/shsconf/202111502010

Mária Trúchliková, D Hrušovská + Show 3 more

Open Access

https://doi.org/10.1051/shsconf/202111502010

Copy DOI

Abstract

The financial health of a company can be seen as the ability to maintain a balance against changing conditions in the environment and companies should pay more attention to the financial viability and risk management. There many models for predicting of financial problems of the companies, especially Altman, Ohlson or Zmijewski are the most cited ones. The main objective of the article is the review and assessment of the level of financial health of Slovak family business in selected industries. The data was obtained from Finstat database and financial statements from 2017, 2018 and 2019 were analysed. For assessing the financial health of selected family businesses 3 models predicting financial distress were used: Kralicek Quick Test, Taffler model and Virág-Hajdu model. The results show how many family businesses are facing to the financial problems using different types of predicting models.

Highlights

Financial viability is the one of the key issues for every enterprise, because current economic environment shaped by globalization, quick economic changes and fierce competition impose challenging conditions for businesses and their prosperity
That’s the reason, why predicting corporate bankruptcy is a crucial task for modern risk management
The financial distress of business entities is closely connected with unpleasant consequences, and these are the main motivation factors for managers or financial analysts to search for the methods that can predict possible financial problems or bankruptcy in advance [1]

Summary

Introduction

Financial viability is the one of the key issues for every enterprise, because current economic environment shaped by globalization, quick economic changes and fierce competition impose challenging conditions for businesses and their prosperity. That’s the reason, why predicting corporate bankruptcy is a crucial task for modern risk management. Different models and approaches predicting corporate financial distress or viability can be classified as a specific tool of financial analysis. The paper focuses on the analysis of financial health in family businesses using selected prediction models. The financial distress of business entities is closely connected with unpleasant consequences, and these are the main motivation factors for managers or financial analysts to search for the methods that can predict possible financial problems or bankruptcy in advance [1]. A number of models to detect financial distress have been developed in the past.

Objectives

Methods

Conclusion