Anticrisis management: warning signals before failure

Critical situations in the operations of companies, both evitable and inevitable, usually have a certain pattern and development trend but are different as to the duration, sector or region. Many of them ask for some legal procedure, the most critical ones lead to a bankruptcy process. The purpose of the research is the rapid increase in number of bankruptcies in Slovakia in recent years. The main aim of this paper is to analyse the evolution of the bankruptcy as a type of critical situation in Slovak companies and specify it according to the regional and sectoral perspective, including economic conditions prior to a bankruptcy. The paper utilizes secondary data obtained fromavailable databases. The initial analysis is focused on the group of all companies entering the bankruptcy process in the period from 2009 until 2019. Firstly, the full sample is considered, regardless of the legal form and data and the outcome of the analysis is used for mapping of industrial and regional intensity of bankruptcies. The second stage of the research is focused on research sample after the irrelevant subjects were ousted from it. As irrelevant subjects we consider sole traders without business data and companies with doubtful data or unclear bankruptcy start. Throughthe available indicators are identified the early warning signals from the financial perspective. Indicators are split into two categories – absolute and relative ones and they are investigated three, two and one years before the start of bankruptcy. Four hypotheses were formulated before the research, the length of bankruptcy process was quantified and specified for SK NACE sectors and regions. The paper presents the results of empirical analysis, which showed that the dynamic change in number of bankruptcies was brought with significant amending of bankruptcy legislation.The longest bankruptcy process is found in accommodation and food services (4 years), while IT companies generally went bankrupt within a year. The economic situation in bankrupting companies significantly worsen in case of sales and equity (the number of companies with negative equity doubled), development of profit/loss fluctuate a bit due to the sale of assets which helped in later stages. There is no statistically significant difference in the length of bankruptcy among the industries and regions. In case of legislative rules the lower cash ratio seems to be the dominant reason while companies enter the bankruptcy. The research results can be useful for further and more detailed analysis, mostly in connection with bankruptcy development (what happen when bankruptcy started) and liabilities compensation and through non-financial bankruptcy factors in individual industries.