The Use of the Altman Model in Evaluation of Economic Performance of a Corporation in the Crisis Period in the Building Sector in the Czech Republic

Marcela Basovníková, Miloš Konečný, Roman Dubový and Andrea Masařová
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Marcela Basovníková: Department of Business Economics, Faculty of Business and Economics, Mendel University in Brno, Zemědělská 1, 613 00 Brno, Czech Republic
Miloš Konečný: Department of Business Economics, Faculty of Business and Economics, Mendel University in Brno, Zemědělská 1, 613 00 Brno, Czech Republic
Roman Dubový: Department of Business Economics, Faculty of Business and Economics, Mendel University in Brno, Zemědělská 1, 613 00 Brno, Czech Republic
Andrea Masařová: Department of Business Economics, Faculty of Business and Economics, Mendel University in Brno, Zemědělská 1, 613 00 Brno, Czech Republic

Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, 2018, vol. 66, issue 2, 409-421

Abstract: The article is focused on verification of the presumption of poor financial management in companies operating in the building sector. Many authors have written about a financial situation of enterprises in the building sector, especially after the economic crisis in the year 2008, when some of them claim and their results confirm that the main reason of bankruptcy of these companies was not the economic crisis but mainly poor financial management. Our results, which were obtained especially by the method of financial analysis and further by a mathematical and statistical method, support this statement. Within the mathematical and statistical methods, there was return on equity used as an explanatory variable, mainly because all variants of the Altman Z-Score are based on the calculation of ratio indicators, which do not include this type of return. Based on the conducted tests it is possible to state that it is highly desirable for the monitored enterprises in the building industry to reach positive values of return on equity.

Keywords: building industry; bankruptcy; financial situation; Altman model; sales; economic performance (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:mup:actaun:actaun_2018066020409

DOI: 10.11118/actaun201866020409

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