Company towards business cycle
Journal Title: Zarządzanie i Finanse - Year 2013, Vol 11, Issue 1
Abstract
There was a sharp fall in the growth of polish GDP dynamics from the 2007 peak. Slowdown of the economy resulted in increase of bankruptcies. We examine some financial aspects of selected construction industry companies listed on Warsaw Stock Exchange in the 2006 – 2009 period. We use some func-tions which enable predicting the failure probability. We allude to the relation-ship between the slowdown and certain economic indicators closely related with these functions. Finally, we field the question of effective strategy against the bankruptcy. The results suggest at least two different strategies to avoid bankruptcy in the recession phase of the business cycle. The first option for a company is to build the equity. Second strategy is to concentrate on generating profits. Com-plementary to above strategies is to maintain current assets on much higher level than current liabilities. The derived results suggest considerable correlations between functions predicting bankruptcy of selected companies and the business cycle represented by GDP growth rate. We must remember, however, that small number of sample companies as well as short period of time do not permit to arrive at general statements. Nevertheless, it could be concluded from the results of the analysis that further research might be fruitful.
Authors and Affiliations
Cezary Godziuk
Keywords
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