ALTMAN MODEL VERIFICATION USING A MULTI-CRITERIA APPROACH FOR SLOVAKIAN AGRICULTURAL ENTERPRISES

The Altman model is still one of the most widely used predictive models in the 21st century, and it aims to highlight the differences between bankrupt and healthy enterprises. This model has been modified several times; its most well-known forms are from 1968, 1983 and 1995. However, the use of the Altman Z-score for Slovak enterprises is more than questionable. The unsuitability of the model for the conditions of Slovak companies has been confirmed by several empirical surveys. The objective of this study was to verify the validation of these three variants of the Altman model, depending on how an unprosperous company is identified, using a sample of 996 agricultural enterprises operating in the Slovak Republic. Four indicators were selected for the identification of an unprosperous enterprise – economic results, total liquidity, equity, and economic value added – and they were monitored over the last year or, as the case may be, over the last three years from 2014 to 2016. Using the Technique for Order of Preference by Similarity to Ideal Solution (TOPSIS) and Coefficient of variation (CV) methods as an objective method for weight determination, a combination of the Altman model from 1968 and the negative total liquidity in the last reference year was determined to be the best. One of our main findings is that the way in which an unprosperous enterprise is identified is a significant factor affecting the overall reliability of the Altman model. The Altman model from 1968 and 1983 confirmed the differences resulting from the natural conditions in which the enterprises operate. The economic results and economic value added (EVA) proved to be inappropriate as indicators for defining an unprosperous enterprise in the conditions of the Slovak Republic.