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The usefulness of financial instruments in assessing the bankruptcy risk of companies

Author

Listed:
  • Agnieszka Lisowska

    (Warsaw University of Technology, Poland)

  • Tadeusz Waściński

    (Warsaw University of Technology, Poland)

  • Jevgenijs Kurovs

    (RISEBA University of Applied Sciences, Latvia)

  • Marcin Szpernalowski

    (Warsaw University of Technology, Poland)

  • Malgorzata Koszewska

    (Lodz University of Technology, Poland)

Abstract

The research problem relates to modern enterprises' central dilemmas, which use existing financial instruments to assess the company's situation. Issues raised in this study involve identifying matters in the financial analysis of chosen companies listed on a stock exchange, the recognition of which may improve and heal the current economic situation. For this purpose, the document analysis and analysis methods were used. Documents contain financial statements of the researched enterprises, balance sheets and income statements included therein, and the conducted source analysis of contemporary subject literature of economics, finance and statistical studies. Studies on assessing the financial situation of the researched companies were carried out according to the following structure: preliminary analysis of financial statements, preliminary analysis of balance sheet, preliminary analysis of income statement, preliminary analysis of cash flow statement, ratio analysis of financial statements, working capital and financial liquidity ratios, efficiency ratios, debt and debt sustainability ratios, capital market ratios. The article ends with the financial condition improvement recommendations. This study may be used in similar scientific publications and teaching materials, or enterprises can use it to recognize ineffective areas. It also can be used to assess the effectiveness of the early warning model.

Suggested Citation

  • Agnieszka Lisowska & Tadeusz Waściński & Jevgenijs Kurovs & Marcin Szpernalowski & Malgorzata Koszewska, 2023. "The usefulness of financial instruments in assessing the bankruptcy risk of companies," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 11(1), pages 191-208, September.
    • Handle: RePEc:ssi:jouesi:v:11:y:2023:i:1:p:191-208
    DOI: 10.9770/jesi.2023.11.1(11)
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    References listed on IDEAS

    as
    1. Harris, Milton & Raviv, Artur, 1988. "Corporate control contests and capital structure," Journal of Financial Economics, Elsevier, vol. 20(1-2), pages 55-86, January.
    2. Riad Baha & Aldo Levy & Amir Hasnaoui, 2023. "Capital structure and default risk of small and medium enterprises: evidence from Algeria," Journal of Risk Finance, Emerald Group Publishing Limited, vol. 24(4), pages 523-536, July.
    3. repec:eme:jalpps:jal-08-2022-0086 is not listed on IDEAS
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    More about this item

    Keywords

    stock exchange; economic analysis; financial analysis; early warning models;
    All these keywords.

    JEL classification:

    • G17 - Financial Economics - - General Financial Markets - - - Financial Forecasting and Simulation
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • L61 - Industrial Organization - - Industry Studies: Manufacturing - - - Metals and Metal Products; Cement; Glass; Ceramics

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