Discriminant analysis as a tool for forecasting company´s financial health

Abstract

Methods that we can use to find out impending problems in the company are prediction models, i.e. models that are able to assess the financial health of the company and to warn owners of the company and company´s business partners before the threat of bankruptcy. Financial analysis can be ex-post and ex-ante. In the literature we can find several names used for the ex-ante financial analysis, such as financial health prediction, forecast financial health, early warning systems, etc. In the article is used the term prediction of financial health. There are many methods on which are based the construction of prediction models and in the article authors further specified discriminant analysis.