Luris
O. A., PhD Chernyshova L. V.
PRACTICAL
ASPECTS OF THE USE OF THE MODELS OF BANKRUPTCY PROBABILITY FORECASTING AND
DETERMINING
As a result of the
global economic crisis, a large number of Ukrainian enterprises have turned out
on the verge of bankruptcy. First of all, it was caused by the fact that the specific
weight of enterprises did not evaluate the probability of occurrence of such a
risk and, thus, the enterprises were not able to respond to the situation that
has arisen. Therefore, there is no doubt that every risk that has the right to
exist for the enterprise should be considered; and the consequences of its
influence on the financial condition of the enterprise should be evaluated; and
immediate measures to respond to the threat as soon as possible should be developed.
Thus,
by using the model of determining the probability of bankruptcy, an enterprise
has an ability to protect its activity from various kinds of financial risks.
It should not be forgotten that these models should be adjusted to the local
conditions of enterprises.
The analysis of
researches and publications of recent years. Problems of bankruptcy are beingstudied
by a lot of scientists, academics and economists, including: O. Bazilinska [2],
B.Grabovetsky [5], S. Ivaniuta [6], O. Podolska [9], G. Savitskaya [11],
N. Tarasenko [12],A.Cherep [13],
The goal of this article
is to conduct a comparative analysis and evaluation of the methods forecasting
and determining the probability of bankruptcy using the example of LTD «ARCELOMMITAL
PACKAGING UKRAINE».
Analyzing the current
state of
The wide range of issues,
related to detecting a crisis state ofenterprises (DCSE), was investigated by
both domestic and foreign scientists and economists. The questions of essence,
different methods of organization and process diagnostics are examined
particularly in such works as A. Altman, L. Lihonenko, R.Lisa, A. Tereshchenko,
Y. Fomin and others. However, despite the significant number of papers and
recommendations regarding the nature, objectives and methods of diagnosis of
the crisis, a lot of questions remain insufficiently clarified and require
further research, adaptation to local conditions of development.
Analysis of the
literature and current perspectives on the concept of the diagnostics of the
enterprise's crisis state demonstrates that today there is no clear approach to
understanding its essence. Considering DCSE authors put different meanings and
essence depending on the nature and objectives, subjects, objects and methods
of analysis. The views of some domestic and foreign authors on the concept DCSE
are analyzed in Table 1.
Table 1. Analysis of approaches to the definition «Detecting a Crisis State of Enterprise»
Author 
Definition
of the concept 
Keywords 

L.
Lihonenko
[8] 
Diagnostics of the problems which appeared
in the operation process of the enterprise and can lead to the negative
consequences in its functioning. 
Analysis of the problems in the activity of enterprise,
which can lead to the negative
consequences 

O.
Andrushko, 
The
system of retrospective, operational and perspective target analysis which is
aimed at identifying the signs of enterprise crisis, its bankruptcy threat
assessment and opportunities to overcome the crisis. 
The system of retrospective,
operational and perspective target analysis
which is aimed at identifying
the signs of enterprise crisis, its bankruptcy threat assessment and
opportunities to overcome the crisis 

І. Blank [3] 
The
system of a target financial analysis which is aimed at identifying crisis
state of enterprise that creates the threat of its bankruptcy. 
Target financial analysis as the
basis for identifying crisis state of enterprise 

L.
Kovalenko, 
There
is the determination of the presence or the absence of a crisis and the
identification of problems and suggestion of acceptable versions of their
solution. 
Identification of the crisis state and developing the concrete proposals
to overcome the crisis problems 


The
research which is focused on
determination of the goals of the
enterprise operation, the methods
which can help to achieve these goals and identify shortcomings 
Research of the enterprise goals 

Despite the fact, that the
models of forecasting the probability of bankruptcy were developed by different
western economists, we consider it to be appropriate to conduct a comprehensive
research of the models to better assess their effectiveness.
The first model is a
fivefactor model which was created by E. Altman (Table 2).
Table
2. The estimated probability of bankruptcy of LTD «ARCELOMMITAL PACKAGING
UKRAINE» by E. Altman fivefactor
model
Indexes 
2013 
2014 
Deviation in 2014 compared to 2013 (+ / –) 
X_{1} = working capital / asset balance summary 
0,876 
2,459 
1,583 
X_{2} = retained profits (loss) / asset balance summary 
3,153 
5,437 
3,867 
X_{3} = pretax profit (loss) / asset balance summary 
5,572 
7,145 
1,573 
X_{4} = equity capital / longterm and current liabilities 
7,542 
8,234 
0,692 
Х_{5} = = sales revenue / asset balance summary 
1,806 
2,415 
+0,61 
Z = 0,717Х_{1}+0,847Х_{2}+3,107Х_{3}+0,420Х_{4}+0,995Х_{5} 
20,185 
33,938 
13,753 
As a result of
calculation Z – figure for a particular enterprise we can make a conclusion:
 If Z <1,81– the
probability of bankruptcy is from 80 to 100%;
– If 2,77<= Z <1,81– the average
probability of a crash is from 35 to 50%;
– If 2,99<Z <2,77 – the probability of
bankruptcy is not large from 15 to 20%; –
If Z <= 2,99 – the
situation in the company is stable, the risk of insolvency in the next two
years is extremely small.
Economic and
mathematical models of E. Altman are not the only ones that are based on
discriminant analysis. In foreign countries other models can also be used
(Table 3).
Table
3. The estimated probability of bankruptcy of
LTD
«ARCELOMMITAL PACKAGING
UKRAINE» by L. Sprinheyt
Indexes 
2013 
2014 
Deviation in 2014 compared to 2013 (+ / –) 
Х_{1} = working capital/ asset balance summary 
0,781 
0,788 
0,007 
Х_{2} = pretax profit (loss) / asset balance summary 
0,135 
1,572 
1,43 
Х_{3} = pretax profit (loss) / current liabilities 
0,081 
2,057 
1,976 
Х_{4} = sales revenue / asset balance summary 
1,806 
2,415 
0,609 
Z
=1,03А + 3,07В + 0,66С + 0,4D 
1,462 
4,37 
2,908 
According to L. V. Sprinheyt
if Zfigure is< 0,862, the enterprise is considered to be potentially
bankrupt. If Z is > 0,862, then the company can be considered to be
functioning.
Based on the data (Table
3) and the calculations, we can conclude that the model L. Sprinheyt for the
previous year is Z = 1,462. This means that the studied company can be considered
to be a potential bankrupt.
During the reporting
period, this Zfigure was even worse Z = 4, 37, it also suggests that the
company is not viable.
It is also possible to
calculate financial results using British scientist Robert Fox. This model was
invented by scientist in 1972.
Table
4. The estimated probability of bankruptcy
LTD «ARCELOMMITAL PACKAGING
UKRAINE» by R. Lis
Indexes 
2013 
2014 
Deviation in 2014 compared to 2013 (+ / –) 
X_{1} = working capital / asset balance summary 
0,781 
0,788 
0,007 
Х_{2} = operating activity profit (loss) / asset balance summary 
0,064 
1,444 
1,38 
Х_{3} = retained profit (loss) / asset balance summary 
0,694 
2,284 
1,59 
Х_{4} = equity capital / longterm and current liabilities 
0,397 
0,704 
0,307 
Z = 0,063Х_{1}+0,092Х_{2}+0,057Х_{3}+0,001Х_{4} 
0,004 
0,214 
0,218 
Using the R. Lis model
we can see the at if Zfigure is<0,037,
the probability of bankruptcy
risk will be high. If Z>
0,037, the probability of the risk
of bankruptcy is low. On this
basis, and the table. 3,5, it can be concluded that the enterprise risk probability
of bankruptcy for the previous year will
be low and for the reporting is high.
After practical calculations of the possibility
of bankruptcy analysed on the basis of
three models (Altman fivefactor model, the Sprinheyt model, the Lis model) it can be concluded that not all the models of estimated
probability of bankruptcy can be relied on. Most of
these models are designed for conditions of foreign countries
enterprises and for countries where there is more stable
economic situation. But even those which have been developed by domestic scientists
may also be not correct.
Therefore, the same
enterprise which is analysed by the results of different models
can be defined as a bankrupt, and as an enterprise
which has a very good financial position.
Therefore, the economists
and scientists try to use such a model which would take into account
all the factors and these specific conditions of the analysed company, or at least
makes the correction of figure so existing models, taking into
account the specificity of the activity and the industry in which the company operates.
List of references:
1.
Андрушко О. Б. Моделювання діагностики кризового стану тазагрози банкрутства підприємства / О. Б.
Андрушко, М. Р. Горбачовська // Вісник Національного університету «Львівська політехніка». – 2006. –
№ 2 (552). – С. 158–163.
2.
Базілінська О. Я.
Фінансовий аналіз: теорія та практика : навч. посіб. / О. Я. Базілінська. – К. :
ЦУЛ, 2009. – 328 с.
3.
Бланк І. О. Управління фінансами
підприємства : підруч. / І. О. Бланк, Г. В. Ситник. – К. : Київ.
нац. торг.екон. унт, 2006. – 780 с.
4.
Большой
экономический словарь /
под ред. А. Н. Азрилияна. – 5е изд. доп. и перераб. – М. : Институт новой
экономики, 2002. – 1280 с.
5.
Грабовецький Б. Є.
Економічний аналіз : навч. посіб. / Б. Є. Грабовецький. – К. : Центр навчальної літератури, 2009. – 256 с.
6.
Іванюта С. М. Антикризове управління :
навч. посіб. / С. М. Іванюта. – К. : Центр навчальної літератури, 2007. – 288 с. .
7.
Коваленко
Л. О. Фінансовий менеджмент : навч. посіб. / Л. О. Коваленко, Л. М. Ремньова.
– 3є вид., випр. і доп. – К. : Знання, 2008. – 483 с.
8.
Лігоненко Л. О. Антикризове
управління підприємством: теоретикометодологічні засади та практичний
інструментарій : моногр. / Л. О. Лігоненко. – К. : Київ.
нац. торг.екон. унт, 2001. – 580 с.
9.
Подольська
В. О. Фінансовий аналіз : навч. посіб. / В. О. Подольська, О. В. Яріш. – К. : Центр навчальної літератури,
2007. – 488 с.
10.
Пономаренко
О. І. Системні методи в економіці, менеджменті, бізнесі / О. І.
Пономаренко. – К. : Основи, 1997. – 390 с.
11.
Савицька Г. В. Економічний
аналіз діяльності підприємства : навч. посіб. / Г. В. Савицька. –
2ге вид., випр. і доп. – К. : Знання, 2005. – 662 с.
12.
Тарасенко
Н. В. Економічний аналіз : навч. посіб. /
Н. В. Тарасенко. – 3тє вид., перероб. – Львів : «Новий Світ – 2000»,
2004. – 344 с.