AN EVALUATION OF FINANCIAL HEALTH IN THE ELECTRICAL ENGINEERING INDUSTRY

One of the characteristics of business competitiveness is business performance. Managerial decision making is one of the main factors that can affect the competitiveness of a company. Financial and economic analysis is an inseparable part of financial management in the practice of business entities. The aim of this contribution is to present several models of forecasting the financial situation of companies. By implementing the Taffler model, Springate model, and the Aspect Global Rating, we assess the financial health of a set of non-financial corporations that, with their net turnover, represents almost the entire electrical engineering industry in Slovakia. As Slovakia has a poorly developed capital market and a numerous private companies do not have publicly traded securities, in this paper we use models based on information from financial statements, an approach which is preferable to the use of market-oriented models. Financial data of selected non-financial corporations needed for the financial analysis were obtained from the Register of Financial Statements of the Slovak Republic, with data for the entire industry obtained from the CRIBIS database and results highlighting the financial health of individual electrical engineering companies. Relevant information should be beneficial especially for suppliers in order to avoid disruptions in their own production as well as for stakeholders, managers and auditors. Among other things, it is possible to monitor which companies have the strongest financial health and which are losing their competitiveness, thus are threated. A creditworthy model confirmed that the sector appears to be financially healthy.


INTRODUCTION
Informed decision-making by managers has a significant impact on the competitiveness of the company. As is stated in Jencova et al. (2016), one of the characteristics of business competitiveness is business performance. For companies, the issue of competitiveness is highly relevant, especially during the current age of globalization, when even surviving in the market is difficult.
Industry competitiveness is not only an important part of the comprehensive competitiveness Stefko, R., Jencova, S., Vsanicova, P., & Litavcova, E. (2019). An Evaluation of Financial Health in the Electrical Engineering Industry. Journal of Competitiveness, 11(4), 144-160. https://doi.org/10.7441/ joc.2019.04.10 of the country but also a factor influencing its economic development (Yuan-Qiang, 2018). Globalization has significantly influenced the electrical engineering industry as a specific carrier of the latest science and technology results by a synergistic effect which greatly improves the quality of production of other industrial sectors, especially the mechanical engineering industry (Sikula et al., 2003). At present, thanks to foreign investors, Slovakia is once again becoming the center of modern industry in Central Europe. The structure of the economy has not changed significantly for the decade, with one exception being the systematic increase in the share of industrial production and selected professional activities in GDP. On the contrary, the share of public services in GDP is decreasing. The electrical engineering industry represents one of the largest industries in the world, and in Slovakia, this industry together with the mechanical engineering sector embodying the main pillars of industry. The electrical engineering industry in Slovakia has grown at the fastest pace among all manufacturing industries, becoming one of the most attractive industries for foreign investors.
The electrical engineering industry is not created by one or just a few big companies. A large number of medium and small companies have a long tradition. These concerns grow despite the influx of large foreign investors who capitalize Slovakia from abroad. Relevant information regarding the financial health of a company is essential in order to avoid disruption to the firm's production and distribution schedules, especially when long-term contracts with selected suppliers are involved (Agostini, 2018). In addition, predictions and explanations regarding corporate financial health is important for certain stakeholders, managers and auditors. This paper provides an analytical view of the financial health of non-financial corporations in the electrical engineering industry.
The aim of this paper is to determine the financial situation of 138 non-financial corporations in the Slovak electrical engineering industry using two bankruptcy models and one creditworthy model. In addition, the paper briefly describes the Slovak electrical engineering industry as an overall sector of the economy.

THEORETICAL BACKGROUND
The term competitiveness has a number of definitions depending on the object of research. It can be studied at a microeconomic level with regard to an individual firm, at the level of industry policies, or at the macroeconomic level taking into account the competitive power of a country. At any of these levels, the foundational concept behind competitiveness studies remains the long-term performance of the subject related to its competitors (Vlachvei et al., 2016). As is stated in Chikán (2008), "there is no competitive national economy without competitive companies." "Business performance and industries performance play a crucial role within international competitiveness" (Arslan & Tathdil, 2012). Therefore, the concept of competitiveness should not be totally explained by only the capacity of a country's productivity, it should also be explained by competitiveness at the level of firm as well as an entire industry. Porter (1980) has claimed that a competitive strategy is based on the attractiveness of the industry in terms of the five competitive forces along with the company's position in the industry. "The basic criterion for a favorable position in the industry is a sustainable competitive advantage" (Fernández et al., 2019). Every company should always be looking for opportunities to improve and strengthen its market position. Future planning and development forecasting is part of a company's commitment to financial health (Birchall, 2014), while "financial health is an ability to generate a certain level of profitability over a given period" (Vernimmen et al., 2014).
At present, there is a research gap in terms of the links between competitiveness and financial health, with a number of authors pointing out how the area of financial decisions is a determining factor for business competitiveness. Securing appropriate financial information allows the company to analyze investment needs, to determine the optimal capital structure, to regulate dividend policy, and thus to define an overall funding strategy (López Salazar et

The Electrical Engineering Industry in the Slovak Republic
In the area of strengthening industrial production, the cardinal aim is to ensure the optimal use of support to increase industry competitiveness, especially by increasing the efficiency of material and energy recovery through innovation of industrial processes and products. The electrical engineering industry is a priority sector with products of high and medium-high technology and with high value added ( Jencova, 2018).
From a historical point of view, Slovakia is and will remain an industrialized state ( Jencova et al., 2018). According to Rynik (2018), now one hundred years after establishment of Czechoslovakia, the biggest changes in the development of the Slovak industry have taken place since 1989. First, industry moved to Slovakia from the Czech Republic, then it developed during the formation of factories and from the 1990s on in international markets. By comparison, at the time of the establishment of Czechoslovakia in 1918 Slovakia was predominantly an agrarian region. At that time, only 18% of the active population worked in the industry, and three fifths in agriculture. Unlike Slovakia, in the Czech-Moravian part of the new state 40% of the population worked in industry and only 30% in agriculture. Nevertheless, in Slovakia, some industry did in fact exist after it began to be established in the second half of the 19th century. At that time, the Slovak industry focused mainly on primary production.
Several unique conditions prevail in the Slovak electrical engineering industry, with one of these being that the market economy began development only after 1989. This corresponds, for example, to development in the capital market for the financing of business development. Funding is largely limited to self-financing and loan financing. The possibilities of capital input through stock exchanges or through financing by loan securities are underutilized. Slovak companies have undergone a transformation process, by which a corporate culture and exact management methods, which had largely been absent, was created in these companies. In general, Slovak companies are strongly export-oriented, with many companies focused on targeted areas of economy support that had been realized in the recent past, especially in the automotive and electrical engineering industries, where cyclical swings of the world economy may have a strong correlation with a country's economy. A large part of the economy is specialized in few sectors, creating sustainability risks not only in terms of one particular country sector, but for the country's overall economy. According to the statistics of the European Union, the Slovak Republic is the most industrialized state in the European area. Industrial production is a principal element in ensuring economic growth in Slovakia. In 2016, the share of industry in GDP was 27.92%, the share of industrial production in GDP reached 23.97%, the share of employment in industry in the total employment of the Slovak Republic was 22.85%, and the share of industrial production in the total employment was 20.91%. We can consider this as the highest figure within the European Union. In 2017, compared with the previous period, the employment index for the NACE Rev. 2 group 26 -Manufacture of computer, electronic and optical products decreased from 104.4 percentage points to 98.6 percentage points, for the NACE Rev. 2 group 27 -Manufacture of electrical equipment reached 105.4 percentage points. The baseline labor productivity index and the basic index of sales increased positively. In 2017, revenue in absolute terms reached 9.450 billion EUR, costs were 9.703 billion EUR, and profit (EBT) was 308.26 million EUR. In 2017, 549,807 people worked in the Slovak industry, with 50,830 people working in the electrical engineering industry itself.
In  There are several models that indicate the financial state of the company and its risk of possible bankruptcy. Linear discriminant analysis models include, for example, the Altman, Springate, and Taffler model. One of the first authors of the bankruptcy model, which is based on logistic regression, was Ohlson (1980). Applications of models using logistic regression can be found in various works. Currently, there exist many predictive models, but unfortunately, few of them are applicable to Slovak companies, as they were developed in other countries, and for other conditions. In the  Czech Republic, there are popular, but little-used models IN95, IN99, IN01, IN05  The disadvantage of most models is their focus on the price book value. It is problematic to determine the market value of the company's equity, as the capital market of the Slovak Republic is not developed, and more than 80% of enterprises have a legal form of Limited Liability Company. In the case of developed economies' capital markets, several studies have confirmed that market-oriented models are better compared to models based on accounting data. However, for the Slovak Republic, which has a poorly developed capital market and a large number of private companies that do not have publicly traded securities, market-oriented models are losing the meaning, and models based on information from financial statements are preferable.
The models of the multiplicative discriminatory analysis reliably describe the financial state of the company. Every financial analyst can generate own model for assessing the financial situation of the business entity. Based on the results of the financial and economic analysis, the financial manager should focus on one aggregate indicator to predict the company's situation.

RESEARCH OBJECTIVE, METHODOLOGY AND DATA
The main aim of this contribution is to determine the financial situation of 138 non-financial corporations from the Slovak electrical engineering industry, using two bankruptcy models and one creditworthy model.
The basic dataset was made up of 138 companies from the electrical engineering industry of the Slovak Republic. We use financial data of these non-financial corporations for the period from 2012 to 2016. These data were obtained from the Register of Financial Statements of the Slovak Republic. The specific business names of these companies are shown in Table 5.
In this paper, for the purpose of determining the financial situation of non-financial corporations, we use the following prediction models: Taffler  The creditworthy model Aspect Global Rating (AGR) is an additive sum of seven ratios: return on sales measured using EBITDA, return on equity, basic earning power, total assets turnover ratio, coverage of depreciation, current ratio, financial autonomy. Rating has 9 degrees, namely (Kubickova & Jindrichovska, 2015): AAA -an optimal managed business entity approaching an ideal business; AA -a very good managed business entity with strong financial health; A -a stable and financially healthy business entity with minimum reserves in profitability or liquidity; BBB -a stable and mediocre managed business entity; BB -a mediocre managed business entity; B -a business entity with clear reserves and issues that need to be very well tracked; CCC -a under-moderate managed business entity, whose profitability and liquidity require recovery; CC -a financially unhealthy business entity with short-term and long-term problems; C -a business entity on the brink of bankruptcy with considerable risks and frequent crises.

RESULTS AND DISCUSSION
Based on the results of the bankruptcy models, we divided the analyzed corporations into appropriate intervals, with the exact number in each considered interval for the Taffler model and Springate model shown in Table 2, with percentages in  According to the results of the AGR model, for the period 2012-2016 the number of non-financial corporations classified by a AGR rating is presented in Table 4, with the percentage shown in Figure 1. The largest number of corporations fell within the AAA group, indicating that the industry is financially healthy. Nevertheless, according to this model the number of entities on the brink of bankruptcy with significant risks and frequent crises was higher.

Fig. 1 -Number of non-financial corporations (in %) included in the intervals applicable for Aspect Global Rating. Source: own research
The calculated values of the used models for each of the 138 non-financial corporations of the electrical engineering industry are presented in Table 5. (see Appendix I.).
Based on the results of a multidimensional discriminatory analysis by applying the Taffler bankruptcy model, we can say that the non-financial corporations of the Slovak electrical engineering industry are prosperous. According to the Springate model, 27.53% of companies could have expected problems in the last two years. According to the Aspect Global Rating, the most frequent rating was AAA (for 26.27% of all enterprises) as an optimally managed business entity approaching an ideal business, with 8.02% of all enterprises on the brink of bankruptcy.
The presented results are the starting point for a further elaboration on the models as well as the basis for further discussion. For further research (e.g., to create a logistic model), it is necessary to take into account qualitative variables, e.g., a region-related variable or the size of a company, as company size is an important factor in predicting the failure of new companies. Small businesses have a higher tendency toward bankruptcy than do large companies. On the other hand, for large companies, a lower failure rate can be presumed, as due to their size they can carry out more extensive transactions under more favorable conditions and so on. For an overall assessment of the electrical engineering industry, it would be beneficial to complement the follow-up research with a cluster analysis aimed at grouping companies based on economic efficiency indicators. It is necessary to map the production potential of Slovak electrical engineering companies to create a database of all non-financial corporations and to support these results with those from subcontractors in other fields of industrial production (e.g. automotive, engineering). An optimal level of investment in this industry is required, as the current rate of investment is currently insufficient to sustain the development trend is needed to strengthen competitiveness.

CONCLUSION
Financial aspects are key factors in the process of company's development (Stefko et al., 2016). Knowledge regarding the company's financial health can help the company thrive in a highly competitive market. Atiya (2001) has pointed out that negative earnings may indicate that company is losing its competitiveness. Forecasting methods concerned with the financial situation of individual non-financial corporations can provide insights into their financial health.
As the Slovak Republic has a poorly developed capital market and a large number of private companies do not have publicly traded securities, in this paper we used models based on information from financial statements, the use of which is preferable than that of market-oriented models. We determined the financial situation of 138 non-financial corporations in the Slovak electrical engineering industry using the Taffler model and Springare model as bankruptcy models, with the Aspect Global Rating as a creditworthy model. In addition, as the electrical engineering industry is one of the largest industries in the world, we briefly described the Slovak electrical engineering industry as an overall sector of economy. The results of the Taffler model evidenced that the nonfinancial corporations within the Slovak electrical engineering industry are prosperous. On the other hand, in the last two years, 27.53% of the analyzed companies could expect problems according to the Springate model. The Aspect Global Rating model showed that the most frequent credit rating was AAA (for 26.27% of all non-financial corporations), a finding which provides information about an optimally managed business entity approaching an ideal business, whereas 8.02% of all enterprises were on the brink of bankruptcy (rating C).
Comprehensive business evaluation methods have a degree of transparency, but at the same time are disadvantageous because of their inaccuracy. Therefore, financial analysts should use several predictive methods to assess and clarify the financial health of companies. Unlike Western companies, with Slovak firms it is necessary to use multiple methods to evaluate the company objectively, and to then compare the obtained results before predicting possible business developments. Any financial analyst can generate his/her own model to assess the financial situation of the business entity, but while taking into account the results of the financial and economic analysis, the financial manager should focus on a single aggregate indicator on the basis of which he/she might predict the situation of the company.