Abstract
The issue of the debt, bankruptcy or non-bankruptcy of a company is presented in this article as one of the ways of conceiving risk management. We use the Amadeus database to obtain the financial and accounting data of Slovak enterprises from 2015 and 2016 to calculate the most important financial ratios that may affect the financial health of the company. The main aim of the article is to reveal financial risks of Slovak entities and to form a prediction model, which is done by the identification of significant predictors having an impact on the health of Slovak companies and their future prosperity. Realizing the multiple regression analysis, we identified the significant predictors in conditions of the specific economic environment to estimate the corporate prosperity and profitability. The results gained in the research are extra important for companies themselves, but also for their business partners, suppliers and creditors to eliminate financial and other corporate risks related to the unhealthy or unfavorable financial situation of the company.
Highlights
Financial risk is the possibility that shareholders will lose money when they invest in a company that has debt, if the corporate cash flow proves inadequate to meet its financial obligations
The bankruptcy prediction modelling helps predict the financial distress of companies
The importance of the area is underlined by the fact, that the information about the future corporate prosperity eliminates potential financial risks and enables to evaluate the financial health of the company based on selected financial indicators or other characteristics of the company or the environment in which they operate
Summary
Financial risk is the possibility that shareholders will lose money when they invest in a company that has debt, if the corporate cash flow proves inadequate to meet its financial obligations. To eliminate potential financial risks and to be able to identify the level of the corporate financial health, predictions models are used, perceived as systems of timely warning of impending problems in the analyzed companies. Their task is to evaluate the financial health of the company based on selected financial indicators or other characteristics of the company or the environment in which they operate [2]. The originality of the research lies in the identification of crucial determinants in Slovak conditions than can predict either prosperity and profitability of Slovak companies or their default (bankruptcy), without regard to any sector, and eliminate potential financial risks threatening the company and its business partners. Determination of prosperity predictors in Slovak conditions can help form a complex Slovak multi-industry prediction model, which would be beneficial for all market subjects, as until the present time we only adopt the results of the models developed in foreign countries, the use of which in our conditions is disputatious
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