48^th International Scientific Conference 2017

TRADITIONAL AND CUTTING EDGE BUSINESS CREDIT SCORING

Vitomir Starčević, Slobodan Subotić, Irena Đalić

Abstract:  Financial stability is the ultimate expression of the ability of companies to operate in a complex and volatile market environment. In the Republika Srpska it was necessary for companies to adapt to new changes because the market favors the companies with good and disfavors the comapies with bad credit history. Starting from this point, the paper presents The Ugljevik Power Plant joint-stock company’s business analysis in the five-year period. The focus of the analysis is based upon financial stability, the company’s assets and profitability, i.e. the performances of its creditworthiness. Therefore, using traditional methods, a financial score analysis has been conducted in both business conditions – when the company was achieving positive business results as well as when it was operating at a loss. In contrast to traditional methods, as cutting edge credit scoring methods, z-score and ZETA analysis have been used to calculate The Ugljevik Power Plant joint-stock company’s credit score. A comparative analysis of the obtained results has been done by applying the old and new z-score and ZETA analysis method. The goal of research is to determine the creditworthiness of the company, as a precondition for its financial stability, and quality assessment and management capability to use information on creditworthiness due to more efficient financial management in the respective company.

Keywords:  financial stability, liquidity, profitability, company, creditworthiness

Published: October 6, 2017.  p. 139-152   PDF