Scenario-Based Forecasting of Bankruptcy Risks for Woodworking Industry Enterprises in the Sverdlovsk Region

Ilya V. Naumov, Anna A. Bychkova, Natalia L. Nikulina

Institute of Economics, The Ural Branch of Russian Academy of Sciences, Yekaterinburg, Russia

Abstract

The woodworking industry in the Sverdlovsk region is a significant sector of the regional economy, contributing to the development of small and medium-sized businesses, attracting investments, and creating jobs. However, the high dependence on timber prices, transportation costs, and macroeconomic factors makes enterprises in industry vulnerable and increases their risk of bankruptcy. This article explores the application of regression and autoregressive ARIMA/ARMA models to develop predictive scenarios for changes in the probability of bankruptcy among enterprises in the industry. The study uses annual financial statements of woodworking enterprises in the Sverdlovsk region for the period 1999–2023. Key internal factors (such as turnover of current assets, quick liquidity ratio, availability of own working capital, profitability of current assets, inventory turnover, etc.) and external factors (such as bank loan interest rates, import of technologies, and technical services) influencing the probability of bankruptcy were identified. Calculations were carried out for three development scenarios: an inertia scenario (assuming the continuation of current trends), an extremely optimistic scenario, and a pessimistic scenario. The study revealed that the levels of financial stability among woodworking enterprises vary significantly, which is attributed to both their size and the impact of macroeconomic factors. The modeling results showed that the risk of bankruptcy remains moderate for large enterprises, while medium-sized enterprises face increased risks due to the volatility of financial indicators. Small enterprises, on the other hand, demonstrate relatively stable financial indicators, are less prone to bankruptcy risks, but face challenges related to asset liquidity and working capital availability. The practical significance of the study lies in the potential use of the obtained forecasts to develop measures aimed at reducing the risks of financial instability. The results can be useful for government agencies, creditors, and entrepreneurs to enhance the financial stability of enterprises in the industry. Further research is planned to delve deeper into financial regulation mechanisms and develop strategies to improve business resilience in conditions of macroeconomic uncertainty.

Keywords

bankruptcy probability; regression analysis; ARIMA modeling; woodworking industry; region; forecasting

JEL classification

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Acknowledgements

The research was supported by the grant of the Russian Science Foundation №24-28-00704 "Scenario modeling and forecasting of bankruptcy risks of industries in the Sverdlovsk region" (https://rscf.ru/project/24-28-00704/).

About Authors

Ilya Viktorovich Naumov

Candidate of Economic Sciences, Associate Professor, Head of the Laboratory of Modelling of Spatial Development of Territories, Institute of Economics, The Ural Branch of Russian Academy of Sciences, Yekaterinburg, Russia (620014, Yekaterinburg, Moskovskaya street, 29); ORCID https://orcid.org/0000-0002-2464-6266 e-mail: naumov.iv@uiec.ru

Anna Andreevna Bychkova

Junior Researcher, Laboratory of Modelling of Spatial Development of Territories, Institute of Economics, The Ural Branch of Russian Academy of Sciences, Yekaterinburg, Russia (620014, Yekaterinburg, Moskovskaya street, 29); ORCID https://orcid.org/0000-0001-8676-5298 e-mail: bychkova.aa@uiec.ru

Natalia Leonidovna Nikulina

Candidate of Economic Sciences, Senior Researcher of the Laboratory of Modelling of Spatial Development of Territories, Institute of Economics, The Ural Branch of Russian Academy of Sciences, Yekaterinburg, Russia (620014, Yekaterinburg, Moskovskaya street, 29); ORCID https://orcid.org/0000-0002-6882-3172 e-mail: nikulina.nl@uiec.ru

For citation

Naumov, I.V., Bychkova, A.A., Nikulina, N.L. (2025). Scenario-Based Forecasting of Bankruptcy Risks for Woodworking Industry Enterprises in the Sverdlovsk Region. Journal of Applied Economic Research, Vol. 24, No. 2, 555-583. https://doi.org/10.15826/vestnik.2025.24.2.019

Article info

Received February 11, 2025; Revised March 4, 2025; Accepted March 12, 2025.

DOI: https://doi.org/10.15826/vestnik.2025.24.2.019

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