Predicting Financial Distress in Companies Using the Original CCB Bankruptcy Model

Abstract

This publication is focused primarily on the possible modifications / applications of financial analysis methods. Author's adjustments / adaptations of the procedures for financial and analytical assessment of data reported by business entities are accompanied by the presentation of his own model. The present text provides an analysis / description of the model called Come Clean Bankruptcy (CCB for short). The construction of the model is a result of the author’s personal belief that there is a need for such model. The conclusions resulting from the application of the CCB indicator have not yet been comprehensively presented in the professional literature. In its basic form, the publication is able to connect three (3) primary domains: 1/ Analytical assessment of economic variables reported by the companies, 2/ Mathematical-statistical methods of financial analysis, 3/ Corporate accounting, representing the primary source of data. The author assumes that the number of analysis of reported data corresponds directly to the number of successful / unsuccessful individuals doing business at a given time / place. The central topic of this publication therefore corresponds to the contemporary practical requirements for an effective evaluation of the financial situation of economic entities. The main reason / motivation for discussing this topic is the fact that the author doubts about the applicability of commonly proposed creditworthy / bankruptcy models in today's corporate world. Possible modifications of commonly used methods of financial analysis and their application to economic entities in the Czech Republic are the core theme of this book.