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Are Bankruptcy Models A Good Predictor Of Firm Financial Distress Of Travel Agents In The Czech Republic?

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  • Veronika Hedija

Abstract

Assessing financial performance of the firm and diagnosing and predicting the potential financial distress is very important for good firm governance. The bankruptcy models are one of the relative simple methods for testing the firm financial health. This study aims to test the reliability of selected bankruptcy models as a predictor of financial distress of Czech travel agencies and tour operator. Altman Z´-Score, Z´´-Score models and index IN05 are employed as the tested bankruptcy models. The data are obtained from the database Albertina CZ Gold Edition and the final sample contains data for 368 firms which represent approximately 9 percent travel agencies and tour operators in the Czech Republic. The results show that the predictive ability of the individual bankruptcy models vary significantly for the subsector of Czech travel agencies and tour operators. Altman Z´´-Score model and index IN05 prove to be relative suitable predictor of financial distress under certain conditions. On the other hand, the reliability of Altman Z´-Score model is weak.

Suggested Citation

  • Veronika Hedija, 2019. "Are Bankruptcy Models A Good Predictor Of Firm Financial Distress Of Travel Agents In The Czech Republic?," Economy & Business Journal, International Scientific Publications, Bulgaria, vol. 13(1), pages 87-93.
    • Handle: RePEc:isp:journl:v:13:y:2019:i:1:p:87-93
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    References listed on IDEAS

    as
    1. Ondřej Machek, 2014. "Long-term Predictive Ability of Bankruptcy Models in the Czech Republic: Evidence from 2007-2012," Central European Business Review, Prague University of Economics and Business, vol. 2014(2), pages 14-17.
    2. Edward I. Altman, 1968. "Financial Ratios, Discriminant Analysis And The Prediction Of Corporate Bankruptcy," Journal of Finance, American Finance Association, vol. 23(4), pages 589-609, September.
    3. Edward I. Altman, 1968. "The Prediction Of Corporate Bankruptcy: A Discriminant Analysis," Journal of Finance, American Finance Association, vol. 23(1), pages 193-194, March.
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    More about this item

    Keywords

    tourism; tour operators; travel agencies; financial distress; bankruptcy models;
    All these keywords.

    JEL classification:

    • A - General Economics and Teaching

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