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Working paper

Markovskaya E.I., Varlakova K.A. The Peculiarities of the Estimation Probability of Bankruptcy of Iron and Steel Companies: Formulation of the Research Problem

The market of metallurgy is exposed to economic cycles, like many different markets. But in contrast of others it is the only economic sector that can disrupt the economy of other areas with its financial instability. This is due to the fact that the production of metallurgical plants is the basis for such industries as rocketry, aircraft industry, production of high-strength joints, defense industry and so on. By reason of metallurgy is not only capable of influencing these areas, but also depends on them, crisis in some of the related sectors can strongly affect its economy. Moreover, developed market competitors and restrictive actions of some countries constitute a serious threat to local enterprises. That is why it is obvious that metallurgical companies are under serious pressure. Therefore, it is necessary to create a method that can reflect a probability of enterprises bankruptcy. The goal of that work was to find the optimal model for calculating the probability of metallurgical enterprises bankruptcy. To achieve this goal, the concept of probability of bankruptcy and methods of its calculation were studied; methods were compared; problems of assessing the probability of bankruptcy were identified; features of metallurgical enterprises were analyzed; models of assessing the probability of bankruptcy for such companies were developed and optimal model was detected. The results of research confirmed the hypothesis that the model, developed with the account of the specifics of the metallurgical industry, shows the most accurate forecasts. It was also found out that the use of the Olson model is possible, but on condition that the coefficients are recalculated before the explanatory indicators for modern data. The obtained results could be applied in practice in calculating the probability of bankruptcy of enterprises of the metallurgical industry.