Abstract:

Business financial failure prediction is of critical importance for decision making of investors, mangers and shareholders. Over the past 40 years, the topic of “business failure prediction” has developed to a major research domain in corporate finance. In current financial failure prediction models, various financial ratios are usually as prediction variables, which implicates that these financial ratios represent the possible cause of financial failure. It is widely recognized that a main cause of financial failure is poor management, and that business operation efficiency is a good reflection of a firm’s management. Financial health prediction models for businesses have the potential to provide methodological tools or mechanism not only for financial management but can also be a positive solution for other disciplines and are interdisciplinary in their nature. Their use in formulating and solving different financial management tasks at different application levels is an effective tool for the quantitative as well as the qualitative enhancement of the effectiveness of management activities. If a generally accepted and practically verified prediction model existed in Slovakia, it would have a definite positive impact on the economy of Slovakia on both its micro and macro levels.