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Economic Analysis: Theory and Practice
 

Assessing the informational significance of the three-component indicator of the financial situation type based on econometrics methods

Vol. 17, Iss. 11, NOVEMBER 2018

PDF  Article PDF Version

Received: 27 August 2018

Received in revised form: 13 September 2018

Accepted: 20 September 2018

Available online: 29 November 2018

Subject Heading: MATHEMATICAL METHODS AND MODELS

JEL Classification: C01, C13, G33, G34

Pages: 2179–2194

https://doi.org/10.24891/ea.17.11.2179

Bukharin S.V. Voronezh State University of Engineering Technologies (VSUET), Voronezh, Russian Federation
svbuharin@mail.ru

https://orcid.org/0000-0003-2997-3634

Subject Calculating a three-component indicator of the type of financial situation is a financial standing evaluation stage. This indicator uses additional balance sheet items, and therefore, represents a more detailed assessment. However, it is poorly connected with the results of overall assessment of financial condition.
Objectives The purpose is to determine the informational significance of the said indicator based on its correlation with scoring analysis estimates.
Methods I employ methods of the expert systems theory, fuzzy sets, the analytic hierarchy process by T. Saaty, rank statistics, and correlation analysis.
Results I introduce a coefficient of adequacy of own funding sources for stock cover and analyze its correlation with the results of overall evaluation of financial condition of the same enterprises based on the scoring analysis. To eliminate the ambiguity in the capital structure estimates, I offer a composite index instead of a set of separate coefficients. Its weighing coefficients are determined through the analytic hierarchy process. To register the impact of the three-component indicator, I suggest expanding the composite index by additional feature, i.e. the coefficient of adequacy, and demonstrate the efficiency of the expansion by computations.
Conclusions The correlation of the three-component indicator with overall estimates of financial standing on the basis of scoring analysis was very weak. However, the offered technique shows that in some cases it is valuable. First of all, it is important for distressed enterprises having unsatisfactory prior estimates of capital structure.

Keywords: three-component indicator, bankruptcy, rating, scoring, correlation

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