COMPANY‘S GOING CONCERN EVALUATION FUZZY MODEL

Abstract

This paper presents company’s going concern evaluation by using a fuzzy model and shows its adequacy experimentally. The model consists of company’s activity and financial data (absolute indicators, ratios) evaluation subsystems, bankruptcy prediction model and evaluation results generalization subsystem.

Evaluation results of all subsystems (except bankruptcy prediction) are calculated using fuzzy logic and they are generalized in separate subsystem, which provides final quantitative evaluation result.

The model parameters are estimated using research data, statistical methods and using various financial ratios data obtained from financial reports of real companies (undergoing bankruptcy procedures and already bankrupt).

The model evaluation results show how much the company is close to going concern interruption by providing quantitative evaluation value which is from the interval [0;1], where if a result is less than 0,5 then the evaluation is negative and if more than 0,5 then the evaluation is positive.

The model adequacy is showed by comparing its evaluation result (using different financial ratios groups) with Altman Z score, Taffler models and the real company’s situation.

DOI: http://dx.doi.org/10.5755/j01.em.18.3.3915