Business Bankruptcy Analysis with Explanations and Suggestions Based on Companies in Poland

DOI

10.2991/978-94-6463-098-5_120How to use a DOI?

Keywords

Business bankruptcy; Factor analysis; Binary logistic regression; Non-parametric test; Liability; Liquidity; Investment

Abstract

This is a study on business bankruptcy analysis and prediction. Traditionally, business bankruptcy prediction study was to build models through different methods and then verify their validity and accuracy with the actual financial information of bankrupt companies. It was still developing over the years. The purpose of this study is to find out the obvious financial ratio that affects the company's bankruptcy, and to give a detailed explanation and analysis, rather than a mathematical equation or a conclusive model. The data was the change in the financial ratios of bankrupt and non-bankrupt companies over time instead of single financial information in the year of bankruptcy. Factor analysis, binary logistic regression, and non-parametric tests were used. By looking for commonalities and priorities in financial ratios, this study speculated on the causes of changes in financial ratios and provided suggestions to managers. The experimental results showed that "Total Assets Related", "Short-term Liabilities Related", "Total Liabilities Related", and "Fixed Assets Related" were significantly different between bankrupt and non-bankrupt companies. After further analysis, the study concluded that sources of financing, the liquidity of the company, and investment were likely to be significant factors that influenced business bankruptcy. The highlight of this study was the more detailed explanation of financial ratio analysis, and its value was the method of avoiding business bankruptcy rather than the judgment of the likelihood of business bankruptcy, as most previous studies have done.

Copyright

© 2023 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Zuyi Li
PY  - 2022
DA  - 2022/12/27
TI  - Business Bankruptcy Analysis with Explanations and Suggestions Based on Companies in Poland
BT  - Proceedings of the 2022 4th International Conference on Economic Management and Cultural Industry (ICEMCI 2022)
PB  - Atlantis Press
SP  - 1059
EP  - 1073
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-098-5_120
DO  - 10.2991/978-94-6463-098-5_120
ID  - Li2022
ER  -