Regression Analysis for Financial Business Problem

Subject: Finance
Pages: 2
Words: 529
Reading time:
2 min


“Valaskova, K., Kliestik, T., Svabova, L., & Adamko, P. (2018). Financial risk measurement and prediction modeling for sustainable development of business entities using regression analysis.” Web.

Problem Summary

The company sees the problem of organizational health and sustainability as one worth discussing. In particular, the longevity and risks of bankruptcy pertaining to businesses are discussed, supported by the data collected from existing databases. The researchers have taken a number of samples from online databases to take a look at Slovak companies and determine the factors that influence the longevity of an organization (Valaskova et al., 2018). The main aim of the authors is to identify financial risks facing Slovak companies, as well as the common predictors of financial stability of business organizations. The Slovak economic market was taken as the specific environment for the examination, and regression analysis was used to identify predictors of the market (Valaskova et al., 2018). The results of the paper identified the practices as being a success, allowing authors to accurately determine some of the predictors of business longevity. However, they also note that the factors identified are only a part of the full picture, limited by the tools and methods utilized in research. The researchers note the potential of their method while also noting its limited usefulness in its current state.

Use of Regression Analysis and Its Effect on the Business Problem

The use of regression analysis for the paper was introduced as a way to find correlations between chosen variables and the financial well-being of an organization. In particular, the linear regression method was used to select 37 factors, or financial ratios, that are likely to influence the longevity of the organization and its profits on the market. These variables include such measures as sales and total assets, liabilities, net income, cash flow, stocks, liquidity ratio and many others. The methods outlined and multiple selection criteria were used to determine the array of factors that can be reliably said to be related to the sustainability of Slovak companies. Researchers have proven that their criteria are sufficient in analyzing companies in Slovenia and have a potential application in other countries as well. The effects of this research have a number of implications beyond the particular businesses examined and the market of a specific nation. Broadly, the identification of qualities proven to be important in business prosperity can help both business leadership and management. The incorporation of modern research into business practices can be an effective way to continuously improve a company. Additionally, it is crucial to consider that each business venture aims to be successful, outlive its competition and deliver sustained value to both the shareholders and the customers. In this process, the promotion of sustainability is a necessary part of the discussion, as it helps organizations to determine their priorities, long-term goals, areas of focus and potential problems. By using regression analysis data, organizations have the potential to incorporate business research into their everyday practice, become more resilient in the face of change, and learn the usefulness of evidence-based solutions. Regression analysis in itself is a valuable tool of business research itself, one that allows authors to draw conclusions from existing data.