The Potential Threat of Corporate Financial Distress in Switzerland
The financial performance and the financial health of companies is given through the ability to generate added value. For the resulting effect of creating added value, maximum activity is required. Otherwise, companies have significant payment difficulties that can be resolved by a radical change in its activities or structure. The aim of this paper is to indicate potential threat of the corporate financial distress in Switzerland. The financial health of companies is analyzed by Taffler’s bankruptcy model. The construction of the predictive models and the bankruptcy models are based on actual data from companies which were threatened by bankruptcy in previous years. The Taffler’s bankruptcy model is applied on the annual corporate financial results in Poland from 2006 to 2015. The results indicated that approximately 34% of companies during the reporting period were at risk of financial distress. Based on the development of the number of endangered businesses, it can be observed that during the recession, the number of companies in financial distress is rising. This hypothesis was confirmed by Pearson’s correlation analysis.
KeywordsFinancial distress Taffler’s bankruptcy model Switzerland Pearson correlation coefficient
The research was financially supported by the Student Grant System of Silesian University in Opava within the “The effect of fundamental factors and corporate governance on stock prices” project. This support is greatly appreciated.
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