Financial Risk Identification based on the Balance Sheet Information

The exposure to risk in modern economy is constantly growing. All enterprises have to take up different types of risks. This paper is devoted to financial risk - its definition, components, factors and consequences and the way it can be identified and analyzed by the usage of information provided by the balance sheet. The advantages and limitations of this method of financial risk assessment are also presented. The potential of identifying financial risk based on the balance sheet information is illustrated on the example of aggregated data for 100 biggest Polish companies for 10 years period (2000-2009).