Business Management and Methods of Predictive Financial Analysis of Companies’ Activity

Abstract

The prediction of the future situation of an enterprise can be made by means of one-dimensional and multidimensional discriminant analysis methods. Generally, these discriminant analyses use the financial ratios methods. The prediction of the future situation of an enterprise can be made by means of one-dimensional and multidimensional discriminant analysis methods. Generally, these discriminant analyses use the financial ratios methods. The article aims to apply one-dimensional discriminant analysis in specific conditions of economic practice. The empirical part of the research proves that this method can better warn against nearing bankruptcy by predicting whether a business will or will not be sustainable. The analysis of multiple scientific works has established that the reliability of one-dimensional discriminant analysis methods can differ from multidimensional discriminant analysis  methods. The research conducted verified the above in a group consisting of prosperous and non-prosperous business entities. The research was conducted based on the sample of enterprises surveyed and showed that one-dimensional discriminatory methods had higher reliability than multidimensional ones. The research does not guarantee that a 100% reliable method will be found; however, it provides for the use of a combination of multiple methods and the assumptions on which these existing methods work.