Home  Journals  Financial Analytics: Science and Experience  42(324) - 2016 November

Forecasting the entity's bankruptcy in line with the operating environment factors

Vol. 9, Iss. 42, NOVEMBER 2016

Article PDF Version

Received: 21 September 2016

Received in revised form: 6 October 2016

Accepted: 24 October 2016

Available online: 17 November 2016

Subject Heading: MATHEMATICAL ANALYSIS AND MODELING IN ECONOMICS

JEL Classification: D24

Pages: 2-12

Importance The article discusses factors that influence the bankruptcy risk, and presents a model to forecast it.
Objectives The research identifies external and internal factors that influence the bankruptcy risk most of all, and builds up a model to forecast the bankruptcy of construction enterprises.
Methods The research involved a method of logistic regression, which helped to detect the above factors, and built up a model to forecast the bankruptcy. The model relies upon data of medium-sized and small construction entities.
Results We found internal and external factors that had a considerable impact on the enterprises' bankruptcy. We also build up a model to project the bankruptcy scenario of medium-sized and small enterprises. Thus, we verified the presumable impact of financial indicators on the entity’s bankruptcy, and factors of the operating environment.
Conclusions and Relevance The bankruptcy forecasting model will help managers, shareholders, would-be investors and other stakeholders to monitor the current position of the company and project possible bankruptcy.

Keywords: bankruptcy, enterprise, insolvency, forecast, logit model

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