Business Failure Risk Assessment and Mapping Activities with the Greatest Potential for Development – Sector Analysis
Keywords:
Financial failure, development potential, medium-sized enterprises, sector analysis, Altman Z-scoreAbstract
Given that medium-sized enterprises are key drivers of economic growth, identification of sectors and activities in which these enterprises are most successful is a prerequisite for effective policy support. This is particularly relevant for developing countries that face numerous challenges in achieving sustainable economic growth and development. Accordingly, the objective of the research is to assess the risk of financial failure of medium-sized enterprises and map the activities with the greatest potential for development in the Republic of Serbia. The subject of the research is the key financial performance of medium-sized enterprises in 2019. The data were obtained from the official financial statements publicly available on the website of the Business Registers Agency. The research objective was realized by applying the financial analysis method and Altman Z-score model. The purpose of the research is to identify activities that are attractive for investments and in which there are enterprises with significant potential for business innovation and networking. The research results show that enterprises operating in the wholesale and retail trade sectors have the lowest financial failure risk. The largest number of activities with significant potential for development are identified in the manufacturing sector. Also, the research determined which activities in the sectors of wholesale and retail trade, construction and agriculture have the greatest potential for development.
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