Evaluating Financial Stability and Predictive Modeling of SME Prosperity in Manufacturing
Evaluating Financial Stability and Predictive Modeling of SME Prosperity in Manufacturing
Author(s): Veronika Kusnierikova, Simona VOJTEKOVA, Sheshadri ChatterjeeSubject(s): National Economy, Business Economy / Management, Micro-Economics, Financial Markets, Accounting - Business Administration, Socio-Economic Research
Published by: Žilinska univerzita v Žiline, Fakulta prevádzky a ekonomiky dopravy a spojov, Katedra ekonomiky
Keywords: corporate finance; financial health; NACE C; prediction model; SMEs
Summary/Abstract: This study evaluates the financial stability of small and medium-sized enterprises (SMEs) in Slovak manufacturing (NACE C). It uses financial data from the FinStat database (2018-2023) focusing on key financial ratios related to activity, liquidity, profitability, and indebtedness. The main aim is to assess the financial health of SMEs and develop a predictive model identifying financially distressed firms. A sample of 1,848 firms was analyzed to assess temporal changes in financial performance indicators using median values and the Friedman test. A predictive model for 2023, based on 2022 indicators, was developed using discriminant analysis. Key predictors included the self-financing ratio, financial leverage, commercial insolvency ratio, current ratio, return on equity, and creditors' payment period. The model achieved 91.2% classification accuracy, correctly identifying 96.1% of prosperous and 86.3% of non-prosperous enterprises. The ROC curve analysis yielded an AUC of 0.952, highlighting the model’s effectiveness in forecasting financial health for manufacturing SMEs in Slovakia's post-COVID context.
Journal: Ekonomicko-manazerske spektrum
- Issue Year: 19/2025
- Issue No: 1
- Page Range: 83-96
- Page Count: 14
- Language: English
