An Empirical Research on the Bankruptcy Risk Prediction In Romania's Agriculture

The paper aimed to predict bankruptcy risk in agriculture using a case study in four companies producing cereals in the South Eastern part of Romania. In this purpose, the Z Score linear Altman's and Conan & Holder's models were applied and the empirical data were collected from the Balance Sheet and Profit and Loss Account of the companies for the period 2012-2014. The main conclusions were the following ones: (i) The Z Scores estimated using Altman's model were higher than the ones estimated using Conan & Holder's model, but any model is useful to predict the future situation of a company; (ii) The prediction of bankruptcy risk is very important in agriculture, like in other economic branches too, as managers need time to analyze the financial situation and take forward corresponding measures across the year to avoid failure and improve the activity, sometime more depending on forecasting than paste financial numbers. (iii) In the area of agriculture, the financial statements of the companies, as a rule, are weak and many Romanian holdings have a high degree of bankruptcy risk.