Possibilities for the Application of the Altman Model within the Czech Republic

摘要

There are currently a number of formulas that are able to predict the bankruptcy of a company (so-called "bankruptcy prediction formulas"). One of the most frequently mentioned formulas among these models is the Altman Z-score formula. The original version of the formula was intended only for companies listed on the capital market. In 2000, however, a version was published for other companies as well, which significantly broadened the applicability of this formula. The objective of this article is to verify the effectiveness of the 2000 Altman Z-score model within a different environment than which it was conducted. In this case, the environment shall be the Czech Republic or, as the case may be, a modified version of this environment. Despite our expectations, when tested, the model was proven to be significantly less accurate. For this reason we introduced a modification of the formula which has led to an increase in the total accuracy of the formula by 55% within conditions of the Czech Republic and to a decrease of 69% in the number of companies that have not been evaluated.