<abstract xmlns="http://www.w3.org/1999/xhtml"><p>At present, many early warning systems (EWS) are available. Most EWSs have been constructed based on data coming from various branches of economy. As a result, the effectiveness of these models in specific sectors of the national economy is frequently insufficient. There are no models dedicated to a specific branch, particularly the wood industry. Based on the Polish homogenous financial data supplied by the wood industry, it was decided to identify respective indexes, which may be used to construct a sector prediction model for bankruptcy in the wood industry. This study presents an analysis of indexes applied in 10 most popular EWSs used in Poland. In the course of the research process, a total of 5 financial ratios (FRs) were selected as best fitting to the investigated branch of economy. These included: profit from sales/balance sheet total, total income/mean annual total assets, operating costs/current liabilities, (operating profit – depreciation)/sales of products and equity capital/total debt.</p></abstract>

At present, many early warning systems (EWS) are available. Most EWSs have been constructed based on data coming from various branches of economy. As a result, the effectiveness of these models in specific sectors of the national economy is frequently insufficient. There are no models dedicated to a specific branch, particularly the wood industry. Based on the Polish homogenous financial data supplied by the wood industry, it was decided to identify respective indexes, which may be used to construct a sector prediction model for bankruptcy in the wood industry. This study presents an analysis of indexes applied in 10 most popular EWSs used in Poland. In the course of the research process, a total of 5 financial ratios (FRs) were selected as best fitting to the investigated branch of economy. These included: profit from sales/balance sheet total, total income/mean annual total assets, operating costs/current liabilities, (operating profit – depreciation)/sales of products and equity capital/total debt.

Identification of financial ratios applicable in the construction of a prediction model for bankruptcy of wood industry enterprises

Folia Forestalia Polonica

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

At present, many early warning systems (EWS) are available. Most EWSs have been constructed based on data coming from various branches of economy. As a result,...

Identification of financial ratios applicable in the construction of a prediction model for bankruptcy of wood industry enterprises

Published Online: May 19, 2018

Page range: 61 - 72

Received: Jan 16, 2017

Accepted: Feb 16, 2018

DOI: https://doi.org/10.2478/ffp-2018-0006

Keywords
early warning systems, prediction, financial risks, bankruptcy, financial ratios

© 2018 Krzysztof Adamowicz et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

Identification of financial ratios applicable in the construction of a prediction model for bankruptcy of wood industry enterprises

Published Online: May 19, 2018

Page range: 61 - 72

Received: Jan 16, 2017

Accepted: Feb 16, 2018

DOI: https://doi.org/10.2478/ffp-2018-0006

Keywordsearly warning systems, prediction, financial risks, bankruptcy, financial ratios

© 2018 Krzysztof Adamowicz et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

Keywords
early warning systems, prediction, financial risks, bankruptcy, financial ratios