The usefulness of financial instruments in assessing the bankruptcy risk of companies

• Published in: Entrepreneurship and Sustainability Issues 2023-09, Vol.11 (1), p.191-208
• Main Authors: Lisowska, Agnieszka, Waściński, Tadeusz, Kurovs, Jevgenijs, Szpernalowski, Marcin, Koszewska, Malgorzata
• Format: Article
• Language: English
• Subjects: Bankruptcy; Cash flow statements; Financial analysis; Financial instruments; Financial statements; Ratios; Risk assessment; Stock exchanges
• ISSN: 2345-0282; 2345-0282
• DOI: 10.9770/jesi.2023.11.1(11)

The research problem relates to modern enterprises' central dilemmas, which use existing financial instruments to assess the company's situation. Issues raised in this study involve identifying matters in the financial analysis of chosen companies listed on a stock exchange, the recognition of which may improve and heal the current economic situation. For this purpose, the document analysis and analysis methods were used. Documents contain financial statements of the researched enterprises, balance sheets and income statements included therein, and the conducted source analysis of contemporary subject literature of economics, finance and statistical studies. Studies on assessing the financial situation of the researched companies were carried out according to the following structure: preliminary analysis of financial statements, preliminary analysis of balance sheet, preliminary analysis of income statement, preliminary analysis of cash flow statement, ratio analysis of financial statements, working capital and financial liquidity ratios, efficiency ratios, debt and debt sustainability ratios, capital market ratios. The article ends with the financial condition improvement recommendations. This study may be used in similar scientific publications and teaching materials, or enterprises can use it to recognize ineffective areas. It also can be used to assess the effectiveness of the early warning model.