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Assessing the Financial Health of Companies Engaged in Mining and Extraction Using Methods of Complex Evaluation of Enterprises

In: Sustainable Growth and Development of Economic Systems

Author

Listed:
  • J. Vrbka

    (Institute of Technology and Business in České Budějovice)

  • Z. Rowland

    (Institute of Technology and Business in České Budějovice)

Abstract

To evaluate the financial health of a company, comprehensive enterprise evaluation methods are very important. These include, in particular, creditworthiness and bankruptcy models and economic value added (EVA). Creditworthiness models effectively evaluate a company’s financial health without using statistical methods, bankruptcy models indicate a threat to the financial health of the business, and are important for many decision-making processes. The aim of this contribution is to evaluate the financial health of an average mining and quarrying enterprise using comprehensive enterprise evaluation methods. Data of companies in this industry is used—specifically, the financial statements for 2012–2016. It is the average enterprise for which these bankruptcy and creditworthiness models are applied: Altman’s analysis in all modifications, indices IN (IN95, IN99, IN01, and IN05), Tafler index, Grünwald index, Kralicek’s quick test in original and modified version, and index of creditworthiness. EVA is further explored in two of its variants—EVA Equity and EVA Entity. Based on the results of these comprehensive enterprise evaluation methods, it can be concluded that the mining and quarrying industry is not financially sound in the Czech Republic. It is possible to correct negative phenomena that characterize the whole industry.

Suggested Citation

  • J. Vrbka & Z. Rowland, 2019. "Assessing the Financial Health of Companies Engaged in Mining and Extraction Using Methods of Complex Evaluation of Enterprises," Contributions to Economics, in: Svetlana Ashmarina & Marek Vochozka (ed.), Sustainable Growth and Development of Economic Systems, pages 321-333, Springer.
    • Handle: RePEc:spr:conchp:978-3-030-11754-2_23
    DOI: 10.1007/978-3-030-11754-2_23
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    Citations

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    Cited by:

    1. Jakub Horak & Petr Suler & Jaroslav Kollmann & Jan Marecek, 2020. "Credit Absorption Capacity of Businesses in the Construction Sector of the Czech Republic—Analysis Based on the Difference in Values of EVA Entity and EVA Equity," Sustainability, MDPI, vol. 12(21), pages 1-16, October.
    2. Emil Exenberger & Michaela Kav?áková, 2020. "Evaluation of financial health of companies through data envelopment analysis: Selection of variables for the DEA model in R," Proceedings of Economics and Finance Conferences 10913067, International Institute of Social and Economic Sciences.

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