The indirect verification of the going concern assumption by analysing the threat of bankruptcy

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dc.contributor.authorKaras, Michalcs
dc.contributor.authorRežňáková, Máriacs
dc.coverage.issue2cs
dc.coverage.volume25cs
dc.date.issued2020-12-24cs
dc.description.abstractThe generally accepted aim of doing business is to maximize the business value. The value of a business strongly depends on its ability to generate future cash flow for its owners. A necessary condition is that the business remains financially viable or in other words, the business should meet the assumption of going concern principle. Verifying such an assumption, however, remains an issue. We suggest that this could be indirectly verified as an absence of threat of imminent financial distress. For this purpose, we analysed a set of cash flow and profit based ratios along with a set of other ratios with a potential influence on the business value. In terms of sample we focus on Czech manufacturing SMEs that were selected, due to their specific features resulting from the financial constraints. The F-test and ttest were employed as a method of identifying the typical signs of risk of financial distress or rather obstacles in accepting the going concern principle. We found that only four of the analysed ratios could serve effectively for this purpose. The best results were achieved when employing ratios describing the operational cash flow or short-term debt, where the gap between viable business and those with limited prospects is the widest.en
dc.formattextcs
dc.format.extent25-40cs
dc.format.mimetypeapplication/pdfcs
dc.identifier.citationManagement Journal of Contemporary Management Issuer. 2020, vol. 25, issue 2, p. 25-40.en
dc.identifier.doi10.30924/mjcmi.25.2.2cs
dc.identifier.issn1331-0194cs
dc.identifier.orcid0000-0001-8824-1594cs
dc.identifier.orcid0000-0002-7261-607Xcs
dc.identifier.other167425cs
dc.identifier.researcheridC-1261-2018cs
dc.identifier.researcheridAAQ-6282-2020cs
dc.identifier.scopus55321000300cs
dc.identifier.scopus36125352900cs
dc.identifier.urihttp://hdl.handle.net/11012/196654
dc.language.isoencs
dc.publisherFaculty of Economics, Business and Tourism, Split, Croatiacs
dc.relation.ispartofManagement Journal of Contemporary Management Issuercs
dc.relation.urihttps://hrcak.srce.hr/247330cs
dc.rightsCreative Commons Attribution-NoDerivatives 4.0 Internationalcs
dc.rights.accessopenAccesscs
dc.rights.sherpahttp://www.sherpa.ac.uk/romeo/issn/1331-0194/cs
dc.rights.urihttp://creativecommons.org/licenses/by-nd/4.0/cs
dc.subjectcash flowen
dc.subjectgoing concernen
dc.subjectbusiness defaulten
dc.titleThe indirect verification of the going concern assumption by analysing the threat of bankruptcyen
dc.type.driverarticleen
dc.type.statusPeer-revieweden
dc.type.versionpublishedVersionen
sync.item.dbidVAV-167425en
sync.item.dbtypeVAVen
sync.item.insts2024.04.29 16:45:29en
sync.item.modts2024.04.29 16:12:42en
thesis.grantorVysoké učení technické v Brně. Fakulta podnikatelská. Ústav financícs
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