Forecasting of the financial threat. Predictional value of the Polish models of discrimination analysis

Abstract

The aim of the study is to empirically verify the usefulness the Polish models of discrimination analysis to the assessment the financial condition of the companies listed on the Stock Exchange and forecasting of the bankruptcy threat and assessment predictional value of these models. The identification of financial risk of the company using these models unlike the others methods is objective and straightforward. On the other hand, it is not perfect. Since it is based solely on the financial data. It does not include such factors as: improvement opportunities, the economic situation, the position of the company on the market, or the quality of the management. However, with respect to the easiness of the application, low engagement of the work and most of all relatively high creditability, discrimination method is the essential basis of the deduction regarding the economic and financial condition of the companies. The research has shown that the analyzed prognostic models constructed on the basis of the discrimination analysis characterize high predictional value even two years before bankruptcy petition and/or before arrangement proceedings. It should be emphasized that the results obtained by means of the discrimination analysis should not be treated as final. Properly used models can be solely important help in the assessment the real financial situation of the companies. In the study the emphasis was put on the difficulties which can occur in the use of the models. The basic problem seems to be the issue of the period of their effective application with respect to the changing economic conditions.bankruptcy, discrimination analysis, predictional value, prediction of financial distress