The comparison of the bankrupcy probability models

Abstract

The paper reveals the models of determining the probability of bankruptcy. Each model is different and when used it in different business sectors, it predicts the probability of bankruptcy differently. This topic is relevant and provides real benefits to the business sector. In the current global pandemic, assessing the likelihood of company going bankrupt has become particularly relevant. It is therefore important to notice and assess the first signs of a threat. The still declining number of bankrupt companies shows that there is practically too tittle focus on diagnosing corporate bankruptcy at an early stage. Research is already under way in Europe to determine the likelihood of large companies going bankrupt. Assessing local companies operating in Lithuania, the probability of bankruptcy in the event of a pandemic has increased significantly. Different bankruptcy forecasting models predict bankruptcy differently. The article examines the service sector. The most widely used and appropriate in the services sector, one of the oldest models for assessing the probability of bankruptcy, is Altman.