Predicting impending bankruptcy and financial distress of a mining company using the HGN model

company. It allows for timely implementation of essential measures
through preventive restructuring. This paper addresses the current
issue of identifying impending bankruptcy in non-financial
companies. Existing predictive models can be used to detect
imminent bankruptcy, but most of them fail to identify it in time. In
this paper, we apply our own predictive model, HGN. Previous
research has confirmed its usefulness in performance evaluation, as
well as its predictive capability. The model takes into account
significant factors that influence the unfavourable financial situation
of a company.
Detecting the imminent bankruptcy of a company in a timely manner
requires an exact approach to modifying the model. The modified
version of the model places a strong emphasis on the company's debt
situation, regardless of the time horizon of the debt. For the purposes
of early identification of impending bankruptcy, the model is tested
based on real data from a company in the Mining of chemical and
fertiliser minerals sector (SK NACE 08.91.0). The company
underwent restructuring and eventually went bankrupt, meeting the
criteria for testing the identification of imminent bankruptcy. By
substituting certain financial indicators contained in the basic version
of the HGN model, we modify its calculation to provide a more
objective forecast of undesirable development. The modification
emphasises the financial situation and the factors that significantly
influence future trends. Based on the comparative analysis and
quantified results, we recommend the preference of the HGN model
for the early warning system.