Z-Score for Bankruptcy Forecasting of the Companies Producing Building Materials

Abstract

The article is dedicated to developing of methodological basis for the probability of enterprises' bankruptcy forecasting. The authors have identified the reasons of the existing bankruptcy forecasting models failure, the necessity of models developing for companies in various industries on the basis of the existing instruments. As a result of the multivariate discriminate analysis we offer Z-scores based on the average annual rates of change and taking into account the peculiarities of the industry companies. The model is developed for companies specializing in the production of building materials, it has a high level of productivity -90.4%.

Review of Research into Enterprise Bankruptcy Prediction in Selected Central and Eastern European Countries

“…Moreover, these authors built their own model using logit analysis, based on a sample of Russian large and medium enterprises. In addition to the above-mentioned models, national models for assessing enterprise insolvency risk using linear multidimensional discriminant analysis were also built by: Fedotova-1995, Lugovskaya-2010-model for small and medium enterprises (Voronova 2012) and Burganova and Salahieva (2015)-model for the forecasting the bankruptcy of manufacturers of building materials based in the Tatarstan Republic. One novelty of the latter model was the fact that the authors considered as variables the average annual rates of change of certain financial ratios, which to a certain extent allowed them to dynamize the model.…”