Home  Journals  National Interests: Priorities and Security  35(320) - 2015 September

Analyzing the financial position of the production enterprise using the fuzzy set framework

Vol. 11, Iss. 35, SEPTEMBER 2015

Article PDF Version

Received: 27 May 2015

Accepted: 8 June 2015

Available online: 8 October 2015

Subject Heading: PRODUCTIVE RELATIONS

JEL Classification: 

Pages: 15-26

Importance The article demonstrates a method for analyzing the financial position of the production enterprise. To evaluate the financial position of the business entity, it is necessary to assess a lot of various indicators and use them to conclude on the entity's position as a whole. Many financial indicators have no exact rates or standards, being strongly dependent on the industry the entity operates in. Classical bankruptcy probability evaluation models cannot deal with such data. In such cases, the fuzzy set framework can be used. The research draws upon this method to calculate an integral indicator that depicts the financial position of the entity.
     Objectives The objective of the research is to analyze the financial position of the entity using the fuzzy set framework. In this respect, we computed six local financial indicators and used them to get an integral fuzzy indicator.
     Methods The research relies upon the fuzzy set framework. Two methods were used to defuzzify the integral indicator, i.e. the Mean of Maximum defuzzification method and the center method.
     Results Following the research, we could conclude on the financial position of the entity, compare various methods for analyzing corporate performance and obtain the final result. We also analyzed the correlation of estimates we obtained using different defuzzification methods and made general conclusions on the use of the fuzzy set framework for similar economic purposes.
     Conclusions We conclude that results do not contradict each other, even if various methods are used. We also illustrate that the fuzzy set framework is easy and flexible for analyzing the financial position of the entity.

Keywords: financial position, bankruptcy probability, fuzzy sets, membership function, defuzzification

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