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Chapter 8
Handbook of Research on New Challenges and Global Outlooks in Financial Risk Management
A limit for distinguishing bankrupt from non-bankrupt businesses.
Published in Chapter:
Risk of Business Bankruptcy: The Application of DEA Method – Case Study of Slovak Businesses
Jarmila Horváthová (Faculty of Management and Business, University of Prešov, Slovakia) and Martina Mokrišová (Faculty of Management and Business, University of Prešov, Slovakia)
Copyright: © 2022 |Pages: 30
DOI: 10.4018/978-1-7998-8609-9.ch008
Abstract
Recently, the demand of business owners to ensure the sustainability of their businesses has come to the fore. It results in a focus on identifying the risks of businesses' financial failure. Several prediction models can be applied in a given area. Which of these models is most suitable for Slovak companies? The aim of this chapter was to point out the possibility of applying the DEA method in measuring the financial health of companies and predicting the risk of their possible bankruptcy. The research was carried out on a sample of companies operating in the field of heat supply. The indicators were selected using related empirical studies, a univariate Logit model, and a correlation matrix. In this chapter, two main models were applied: the DEA model and the Logit model. The main conclusion of the paper is that the DEA method is a suitable alternative in assessing businesses' financial health.
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