Abstract:

Companies are the complex organisms that do not exist in isolation but interact each other with entities in the national economy, whether they are other companies, non-financial or financial corporations, government authorities or individuals and households. Failure, respectively the bankruptcy of the company will result in a chain reaction with negative consequences for all economic subjects. Every (not only market) economy in the world encounters the failure or bankruptcy of business entities.  Company failure can take a variety of forms, manifestations and consequences. In particular, the consequences are the driving force of the research and development of the issue. It is a description or construction of methods and models enabling to predict the failure with advance time. That is, to know the likely evolution of company fundamentals in the next few years. While in the centrally managed economies the consequences were borne by the state as a whole, in market economies they directly affect all entities entering into relations with the particular company. In other words, all market participants (owners, creditors, suppliers, customers, employees, competitors, the state, the municipality, etc.) are involved in a market economy. Each of the involved groups applies a wide range of tools, algorithms and methods, but their aim is identical, i.e. to predict the future development of the company's financial health, respectively companies. The entities seek the answer for question whether a particular company will not be loss-making in the future or even due to bad decisions, or endogenous and exogenous influences will not cease its activities. Development of the algorithms and methods would not be possible without a detailed, almost holistic knowledge of the causes of company bankruptcies. This article deals with the issue problem. Its ambition is to serve as a methodological instrumentation in the construction of bankruptcy models.