Proceedings

the image provided by the decreasing values recorded by EV and MC, by stressing
oversized future cash flows, not correlated with the financial realities (the company’s
position and performance). Moreover, after data analysis in SPSS, for the analyzed
sample, 40.2% of the variation corresponding to the state of the company (its being
insolvent or not) is determined by IEV, a rather high value compared to the 23.7%
determined by IMC and the 29.3% determined by IVFCF, which explains the importance
of using the net accounting asset in presenting the faithful image of the company. As
a result, the patrimony method can be considered the main method that can serve to
present the real state of a company and implicitly to indicate the insolvency risk, in an
unstable economic environment.
Applying DA on the data in the analyzed sample, respectively the analysis of the
indexes punctually recorded for each individual company, based on the three
suggested evaluation methods, we have obtained in SPSS a series of descriptive
statistics synthesized in Table 4. Based on them, the intervals corresponding to each
category variable in Table 2 have also been determined.
Table 4. Descriptive statistics at the sample level
State of the
Company
Insolvent
companies
Solvent
companies
Total
Variable Mean
Standard
deviation
IEV -2.73 9.56
IMC 0.29 1.50
IVFCF 1.68 6.55
IEV -0.14 0.27
IMC 0.60 1.50
IVFCF -0.60 2.30
IEV -1.43 6.80
IMC 0.45 1.49
IVFCF 0.54 4.98
The descriptive statistics presented in Table 4 point out a series of differences at the
sample level, in what concerns the state of the company (solvent or insolvent),
according to the values of the indexes of the three evaluation methods. We can see
that a bankrupt company records a very small average value of IEV and a high average
value of IVFCF, a situation opposed to the state recorded for solvent companies, the
difference between the values of the indexes corresponding to the used methods being
rather low. We can draw the conclusion that obtaining a value in an optimistic
manner, through the method based on the present cash flows, can be realistically
evaluated using the patrimony method, which seems much more prudent and which
takes into account the economic realities, the position and financial performance of
the company. At the IMC level, the difference between the average values of the
indexes for solvent and insolvent companies is insignificant (0.31), compared to the
differences resulted after applying the other methods (2.59 for EV and 1.08 for
VFCF). This indicates that the method based on the corrected stock exchange capital
(corrected market capitalization) market cannot signal any significant difference
between the value of a solvent company and that of an insolvent company, as its
usage does not allow the identification of the insolvency risk.
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