Predictive Capabilities of Working Capital as an Indicator of Impending Insolvency of a Company in the Czech Republic

The aim of the study is to analyze the predictive capabilities of changes in working capital as an indicator of impending insolvency of companies in the Czech Republic. The research uses empirical data from the financial statements of companies that entered insolvency proceedings between 2019 and 2024 and compares them with a control sample of financially stable entities. The analysis was performed using logistic regression and additionally verified using ROC analysis. The results confirm that selected working capital indicators, in particular current liquidity and the ratio of working capital to total assets, have a significant ability to predict financial instability. The findings highlight the practical importance of effective working capital management for the early identification of insolvency risk and provide a basis for the development of early warning models in the corporate sector.