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Scoring Model of the Financial Health of the Electrical Engineering Industry’s Non-Financial Corporations

Author

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  • Sylvia Jenčová

    (Department of Finance, Faculty of Management, University of Prešov, 080 01 Prešov, Slovakia)

  • Róbert Štefko

    (Department of Marketing and International Trade, Faculty of Management, University of Prešov, 080 01 Prešov, Slovakia)

  • Petra Vašaničová

    (Department of Mathematical Methods and Managerial Informatics, Faculty of Management, University of Prešov, 080 01 Prešov, Slovakia)

Abstract

The aim of this paper is to estimate the probability of bankruptcy of the companies from the Slovak electrical engineering industry based on data obtained from financial statements. Parameters of the predictive model were estimated using binary logistic regression. This model is able to predict the probability of a company’s bankruptcy based on values of significant explanatory variables (accounts payable turnover ratio (APTR), return on sales (ROS), quick ratio (QR), financial leverage (FL), net working capital/assets (NWC/A)). The model is constructed using the financial data of a large sample of electrical engineering companies from 2017. Resulting estimated odds ratios show that, in the electrical engineering industry, ROS, QR, and NWC/A significantly reduce the likelihood of bankruptcy. In other words, if these financial indicators increase, the probability of bankruptcy decreases. Our results are also applicable to other industries connected with industrial production, especially the mechanical engineering industry.

Suggested Citation

  • Sylvia Jenčová & Róbert Štefko & Petra Vašaničová, 2020. "Scoring Model of the Financial Health of the Electrical Engineering Industry’s Non-Financial Corporations," Energies, MDPI, vol. 13(17), pages 1-17, August.
    • Handle: RePEc:gam:jeners:v:13:y:2020:i:17:p:4364-:d:403402
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    References listed on IDEAS

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    Cited by:

    1. Beata Gavurova & Sylvia Jencova & Radovan Bacik & Marta Miskufova & Stanislav Letkovsky, 2022. "Artificial intelligence in predicting the bankruptcy of non-financial corporations," Oeconomia Copernicana, Institute of Economic Research, vol. 13(4), pages 1215-1251, December.
    2. Róbert Štefko & Petra Vašaničová & Sylvia Jenčová & Aneta Pachura, 2021. "Management and Economic Sustainability of the Slovak Industrial Companies with Medium Energy Intensity," Energies, MDPI, vol. 14(2), pages 1-15, January.

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