The model of bankruptcy prediction assesment for different solvency and profitability companies

Abstract

The article starts with a review of the essence and main reasons of bankruptcy occurence. Classical bankruptcy prediction models are analysed in this paper. In order to find the most suitable bankruptcy probability assessment models depending on the company’s solvency and profitability, models of linear discriminatory analysis such as: Altman, Taffler&Tisshaw, Springate, Liss, and also the logistic regression model Chesser were analyzed. It examines how bankruptcy prediction models foresee the probability of bankruptcy for different solvency and profitability companies over a three-year period. Also it analyse what led to the obtained results and what is the relationship between the choice of the bankruptcy probability assessment model and the financial ratios used to calculate it.