An Analysis of Selected Benchmarks and Evaluation Methods to Test the Replacebility of Mathematical- Statistical Methods in Benchmarking by Solvency and Bankruptcy Models: A Case Study in Assessing Gravel-Sand Mining Companies in the Czech Republic

Abstract

Benchmarking is a useful managerial tool to identify opportunities in order to improve the efficiency and effectiveness of a companyvia the application of benchmarks to assess and compare the company efficiency with the leader in the field or other selected companies.For this reason, it is vital to conveniently select the different benchmarks and adequate methods for the evaluation. Havingbenchmarked five selected mining companies exploiting gravel-sand in the Czech Republic, CEMEX Sand, k.s., Českomoravskýštěrk, a. s., LB MINERALS, s.r.o., CEMEX Cement, s.r.o., and ZEPIKO, spol. s r.o., the article aims to consider mutual replacebilityof mathematical-statistical methods used for evaluation in benchmarking. Next, it verifies the agreement in results rendered bythe solvency and bankruptcy models and those rendered by mathematical-statistical methods. We used eleven benchmarks (EBITDA,ROA, ROS, WACC, Quick ratio, Total assets turnover, Net working capital turnover ratio, Interest coverage, Altman’s model,Index IN05, and Taffler’s model), and seven evaluation methods. The research study shows that the majority of the examinedbenchmarking methods may be mutually replaced. Based on the results, we determined two groups of methods, out of which onemethod may be chosen and mutually combined with a method from the other group, and vice versa. The first group contains theRank ordering weighting method, Point allocation method, Standardised variable method, Method of the distance from a fictitiousobject, Weighted sum method and TOPSIS method. The second group contains Weighted average method. The research also provesthat selected benchmarks, such as Altman’s model and Taffler’s model, may be used on their own.