Home  Journals  International Accounting  4(466) - 2020 April

The use of the scenario analysis to assess and prevent possible corporate bankruptcy

Received: 3 April 2020

Received in revised form: 9 April 2020

Accepted: 10 April 2020

Available online: 15 April 2020

Subject Heading: Managerial accounting

JEL Classification: М40, М41

Pages: 395–413

https://doi.org/10.24891/ia.23.4.395

Subject. The article discusses methodological aspects of the scenario-based forecasts. Studying the future corporate standing through its economic assessment, we will be able to outline a set of actions the management may take to alleviate adverse effects, enhance the performance of an entity and prevent its bankruptcy.
Objectives. We study how predictive scenarios are made through the economic assessment so as to leverage the financial and operating activity and prevent possible corporate insolvency.
Methods. We employed general methods of research, such as analysis and synthesis, induction and deduction, and specific methods of economic studies, such as generalization and grouping, logic and systems approaches, econometric models.
Results. Approaching the predictive management analysis of corporate operations in line with its technological distinctions, we can forecast the corporate development scenario, which will lay the basis for managerial decisions to reduce the bankruptcy risk.
Conclusions and Relevance. Having examined previous proceedings and modern trends in management analysis, I concluded that the predictive corporate analysis should develop so that scenario-based forecasts could be feasible, including technological aspects of the entity. Management analysis data shall underlie reasonable decisions for avoiding adverse consequences for corporate economics. The findings can be used in corporate governance when analyzing and outlining corporate development paths.

Keywords: management analysis, economic assessment, scenario analysis, forecasting, bankruptcy

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