Limitation of Financial Health Prediction in Companies from Post-Communist Countries

摘要

The financial health of a company can be seen as the ability to maintain a balance againstchanging conditions in the environment and at the same time in relation to everyone participatingin the business. In the evaluation of financial health and prediction of financial problems of thecompanies, various indexes are used that can serve as input for expert estimation or creation ofvarious models using, for example, multi-dimensional statistical methods. The practical application ofthe proper method for evaluation of financial health has been analysed in post-communist countries,since they have common historic experiences and economic interests. During the research we followedup the following indexes: Altman model, Taffler model, Springate model, and the index IN, based onmulti-dimensional discrimination analysis. From the research results there is obvious a necessity tocombine available methods in post-communist countries and at least to eliminate their disadvantagespartially. Experiences from prediction models have proved their relatively high prediction ability,but only in perfect conditions, which cannot be affirmed in post-communist countries. The taskremains to modify existing indexes to concrete situations and problems of the individual industriesin the chosen countries, which have unique conditions for business making.