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KARAS, M. REŽŇÁKOVÁ, M.
Original Title
Bankruptcy Prediction: To what Degree does Past Development Count?
Type
journal article - other
Language
English
Original Abstract
Abstract: In most cases, bankruptcy models are based on financial indicators (so called predictors) that describe a current condition or a certain area of financial health, like profitability, indebtedness and so on. But they do not tell us anything about relevant past development in this area. The main question of the research presented was, how much of the information about the past development could be useful in predicting bankruptcy. The aim of our research is to analyse the partial potential of financial ratios for predicting bankruptcy and to compare their importance with the importance of commonly used indicators. Twenty eight indicators were examined in a sample of construction companies operating in the Czech Republic, as well as their development over the past five periods. The non-parametric Boosted Trees method was used to evaluate the relative importance of predictors. The results show that the indicators describing past development could be a significant predictor of bankruptcy, however their main potential is in possible synergy with the indicators describing the current state, both being of the same area of financial health.
Keywords
construction companies, bankruptcy prediction, financial ratio, dynamic indicators, model accuracy, multi-period transformation, model development
Authors
KARAS, M.; REŽŇÁKOVÁ, M.
Released
16. 12. 2016
Publisher
WSEAS
ISBN
2224-2899
Periodical
WSEAS TRANSACTIONS ON BUSINESS AND ECONOMICS
Year of study
13
Number
1
State
Republic of Austria
Pages from
480
Pages to
488
Pages count
URL
http://wseas.org/wseas/cms.action?id=12125
BibTex
@article{BUT130640, author="Michal {Karas} and Mária {Režňáková}", title="Bankruptcy Prediction: To what Degree does Past Development Count?", journal="WSEAS TRANSACTIONS ON BUSINESS AND ECONOMICS", year="2016", volume="13", number="1", pages="480--488", issn="2224-2899", url="http://wseas.org/wseas/cms.action?id=12125" }