Torun Business Review (Mar 2017)
Polish Early Warning Systems In Predicting Risk Of Bankruptcy Ff Wawel S.A In The Years 2013-2015
Abstract
The always relevant issues of the assessment of bankruptcy risk for enterprises require that bankruptcy processes occurring in Poland are analysed on a continuous basis. This leads to verification of the existing theory on economics of bankruptcies and business failures on the one hand, and its further evolution on the other hand. For business practice, of significant importance in this area are methods for effective (pre-emptive) diagnosis of the signs of the deteriorating economic and financial situation of an enterprise, which can precede an enterprise’s loss of the ability to pay and consequently permanent insolvency (bankruptcy). The traditional ex post indicator analysis has become by far insufficient. Thus, as it evolved, various science and research centres around the around, including in Poland, were undertaking efforts to create new early warning systems to ensure pre-emptive assessment of the bankruptcy risk level for economic entities. An early warning system is one of the elements designed to assess the economic and financial situation of a company. It allows us to identify the risk at an early stage and implement appropriate corrective processes. Early identification of the signs of a pending crisis should thus be one of the basic tasks in the management of a company. The aim of the paper is to assess the identification of bankruptcy risk for the company Wawel S.A, with the analysis covering the period from 2013 to 2015 in the company's operation. Moreover, the authors of the paper show the possibility of the application of Polish models for bankruptcy risk assessment by both internal and external stakeholders, who can use the information contained in financial statements and calculated financial indicators to assess whether a given economic entity is a healthy or sick entity. The research methods used in the paper are: literature analysis, calculations by Polish early warning systems and analysis of the case study of the company Wawel S.A covering the period from 2013 to 2015. The paper has been written based on the literature in the area of "economics of bankruptcies", accounting, financial analysis and auditing, provisions of law and financial statements of the company Wawel S.A. The selection of the company Wawel S.A for analysis is to confirm the effectiveness of warning models-systems in predicting lack of bankruptcy risk for an economic entity, as the good economic and financial situation of the company analysed should be reflected in the fact that all the models show that Wawel S.A is a healthy company, i.e. no business continuity risk is identified.
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