Financial health models and bankruptcy prediction models

The aim of this thesis is to demonstrate the limitations and possibilities of using selected financial health models and bankruptcy prediction models in a selected group of companies. In the first part of this work, famous financial health models and bankruptcy prediction models are introduced and described in detail. Among the most important models belong the Altman Z Score, Index IN, Quick test by Kralicek, Grünwald's model etc. In the practical part, selected models are applied to specific enterprises and their evaluation results. The result of the bankruptcy and solvency models is one single final coefficient, which serves as the basis for labelling the enterprise either as solvent or bankrupted. As great advantages of these models could be mentioned their universality, simplicity, inexpensiveness and the fact they are not very time consuming. Still there are certain limitations to the data validity. The three enterprises analysed in 2011 were evaluated as bankrupted according to the models yet are still in operation at present time. It follows that the models only describe the particular financial situation but do not predict bankruptcy. Next, it was also discovered that it is not possible to use only one model for the evaluation of the complex situation of an enterprise, it is necessary to be concerned with the non-financial performance indicators as well. All assumed limitations of the models and possibilities of their usage have been, based on the analysis, confirmed