Bankruptcy forecasting of hotel companies in the Republic of Serbia using Altman's Z-score model

Milašinović, Marko; Knežević, Snežana; Mitrović, Aleksandra

doi:10.5937/menhottur1902087m

Cited by 15 publications

(17 citation statements)

References 8 publications

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“…The study led to some very important empirical evidence that allows us to conclude that Altman's Z'' Score is definitely one of the best models for predicting corporate crises (Bottani, Cipriani & Serao, 2004). Similar confirmations come from studies (Qiu, Rudkin & Dlotko, 2020;Muñoz-Izquierdo, Laitinen, Camacho-Miñano & Pascual-Ezama, 2020) conducted in very different country contexts (Shafitra, Rizka & Norman, 2020;Milašinović;Knežević & Mitrović, 2019) and referring to companies belonging to different types of sectors (Bimpong, et al, 2020), different corporate forms, un listed and listed company (Guanglu, 2021). A less recent but significant study for us (Celli, 2015) was conducted in 2015 in Italy on a sample of 102 industrial companies listed in the period 1995-2013, of which 51 went bankrupt and 51 not bankrupt.…”

Section: The Relevance Of the Topic In The Literaturesupporting

confidence: 57%

Predicting the Risk of Insolvency in Small Enterprises: Critical Analysis of the Predictive Model Associated with the New Italian Code of Business Crisis

Arcari¹,

Grechi²

2021

IJBM

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Numerous studies have been conducted to verify whether, and under what conditions, Altman's Z-Score model can also be applied to unlisted, non-US companies. The response of numerous studies confirms the substantial validity of this algorithm. However, in Italy, the legislator, in launching the new Business Crisis Code in 2019, in adherence to an important European recommendation, did not adopt the aforementioned model but approved a different one. In order to find a justification for this choice, the present work intends to test the effectiveness of the warning indices that will be adopted in Italy by comparing them with the Altman predictive model in the Z'' Score version. To this end, the two models were applied to the balance sheets of 789 Italian firms that went bankrupt in the period 2016-2018 and, at the same time, to a control sample, equal in number and composition, of non-bankrupt firms. The results of this analysis produced two distinct findings. The Italian method proved to be less effective in predicting a crisis than the Z'' score. but more effective in determining whether a firm is truly healthy. This evidence is useful to confirm once again the effectiveness of the Z'' Score in a non-American context but also, and above all, to provide suggestions to the Italian legislator so that it can refine the predictive model currently in force.

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Section: The Relevance Of the Topic In The Literaturesupporting

confidence: 57%

Predicting the Risk of Insolvency in Small Enterprises: Critical Analysis of the Predictive Model Associated with the New Italian Code of Business Crisis

Arcari¹,

Grechi²

2021

IJBM

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“…during 2012, the financial health of the observed hotel companies improved. Milašinoviš et al (2019) dealt with the possibility of bankruptcy in 7 hotel companies from the Belgrade Stock Exchange. Those are hotel companies whose market capitalization is higher than 100 million RS dinars.…”

Section: Literature Reviewmentioning

confidence: 99%

Profitability analysis of hotel companies in the Republic of Serbia

Mitrović¹,

Knežević²,

Milašinović³

2021

Menadž u hotelijerstvu i turiz

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The purpose of the research is to examine the level and trends of profitability ratios of hotel companies operating in the Republic of Serbia in the period from 2016 to 2019. The research was conducted on a sample of 100 hotel companies, where profitability was measured by the operating profit rate, the net profit rate, the rate of return on total assets and the rate of return on equity. The results of the research show that the values of the used profitability indicators have increased in 2017 compared to 2016, but decreased in 2018 and 2019. Statistical analysis found that changes in the operating profit rate and net profit rate during the observed four-year period were not statistically significant, while the decline in the value of the rate of return on total assets in 2018 compared to 2017 and the decline in the rate of return on equity in 2018 compared to 2017 and in 2019 compared to 2018 was statistically significant. The results of the research can be important for (1) the management of a company, (2) its owners, because they enable gaining an insight into the level of profitability of entrusted companies, i.e. the companies that are in the ownership, and (3) investors and creators of tourism development policy.

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“…Beneish je istakao da "korisnost ove analize zavisi od toga ko je koristi". Dalje, za predviđanje nastanka bankrotstva preduzeća zainteresovana su mnoga lica [39]. Ulažu se veliki napori kako bi se predvideo nastanak bankrotstva preduzeća [40].…”

Section: Pregled Literatureunclassified

Using Beneish M-Score and Altman Z-Score models to detect financial fraud and company failure

Knežević¹,

Špiler²,

Milašinović³

et al. 2021

Tekstilna industrija

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Bankruptcy is a risk that any company can face, regardless of its size. The importance of predicting a company's bankruptcy for years before its development is enormous, and it is important for financial sustainability. Financial reporting is an important platform for making financial decisions of investors and creditors. In recent years, the frequency of false financial reporting by firms has increased and there are concerns about investors' confidence in capital market. Academics and industry experts adopt a variety of risk management techniques to detect fraudulent financial reporting. A case study was applied in this paper. Based on publicly available financial data (disclosed financial statements) of a domestic textile company for the period 2017-2020, whose shares are listed on the stock exchange, a survey was conducted based on the application of Altman's Z-Score model and Beneish M-Score model. Financial distress is an important criterion to monitor when assessing the likelihood of fraud reporting. When a company is operating poorly, there is a greater motivation to engage in fraudulent financial reporting. The findings show that the results differ according to the applied method in terms of identifying the possibility of bankruptcy and the possibility of fraud in the financial statements of the observed company. The results of the study can be important to investors, auditors, regulators, bankers, tax and other government bodies.

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Bankruptcy forecasting of hotel companies in the Republic of Serbia using Altman's Z-score model

Cited by 15 publications

References 8 publications

Predicting the Risk of Insolvency in Small Enterprises: Critical Analysis of the Predictive Model Associated with the New Italian Code of Business Crisis

Predicting the Risk of Insolvency in Small Enterprises: Critical Analysis of the Predictive Model Associated with the New Italian Code of Business Crisis

Profitability analysis of hotel companies in the Republic of Serbia

Using Beneish M-Score and Altman Z-Score models to detect financial fraud and company failure

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