Comparison of Gulka’s Model and Model IN05 on Sample of Slovak Industrial Companies
Comparison of Gulka’s Model and Model IN05 on Sample of Slovak Industrial Companies

Author(s): Natália Klempaiová, Mária Bohdalová
Subject(s): Business Economy / Management, Methodology and research technology
Published by: Masarykova univerzita nakladatelství
Keywords: Index IN05; Gulka’s model; corporate financial health forecast; credit and bankruptcy models;
Summary/Abstract: In this paper, we analyse two modern bankruptcy models on samples of selected Slovak industrial enterprises. IN05 is a well-known model in Slovakia that gives a high percentage of reliability in predicting the financial health of Slovak companies. The Gulka’s model was created in 2016 and its popularity is rising. The aim of this paper is to compare IN05 and Gulka’s models and determine which of them is more suitable for Slovak enterprises. Analyses were based on real data from the latest available financial statements of industrial enterprises for five industries typical of Slovakia: Automotive, Electricity, Agriculture and Forestry, Construction, Mechanical Engineering. We have selected private domestic companies with limited liability. In the case of companies in bankruptcy or restructuring, we used the latest available financial statements before the date of bankruptcy or, respectively, management of restructuring. Using contingency tables, we compared the number of correct predictions for both models - the Gulka’s model, created by the logistic regression method (LOGIT model) and the IN05 index created by the Multidimensional Discrimination Analysis (MDA method). We predicted the correct forecast when the company was actually in bankruptcy and the model rated it or if the company was not bankrupt and the model ranked it as prosperous. Both models are very useful in the conditions of the Slovak Republic. For Slovak industrial enterprises, the Gulka´s model is more reliable. In general, the model's highest ability to leverage is in the country where the model was created or for the industry for which it was created.

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