Sanja Vlaović Begović, Ljiljana Bonić, Slobodanka Jovin

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Turbulent conditions on the Serbian market, the deep consequences of the global economic crisis that have shaken the already weakened economy are strong reasons for constant monitoring of business in Serbia. Identifying financial problems in a company that lead to bankruptcy reduces the risk of potential losses. The aim of the paper is to compare the Altman model and the Zmijewski model that are applied in companies in Serbia and by that to conclude which one gives better results for predicting bankruptcy. Also, the paper will examine the significance of individual ratios in models using correlation analysis.

The results of the survey showed that the accuracy of predicting the bankruptcy of the Altman model for emerging markets on Serbian companies undergoing bankruptcy proceedings, is high, 88.68% for one and 79.25% for two years before the initiation of bankruptcy proceedings. The accuracy of the Zmijewski model is slightly higher than the Altman model for one year before the initiation of bankruptcy proceedings and amounts to 90.57%. Two years before bankruptcy, the Zmijewski model's accuracy is the same as with the Altman model (79.25%). When it comes to the overall sample (undergoing bankruptcy proceedings companies and non-bankruptcy companies), the average accuracy of the Zmijewski model is higher than the Altman model (89.62% > 85.22%). Based on Pearson's correlation coefficient, we have established that one year before initiating bankruptcy, there is almost an impeccably perfect positive relationship between the ratio of working capital and total assets on one side, and Z’’- score on the other. The Zmijewski coefficient has an almost perfect negative relationship with the indebtedness ratio. By observing both models, it can be concluded that companies in Serbia had a problem with liquidity, indebtedness and the impossibility of returning the invested funds, which contributed to the poor financial situation and initiation of bankruptcy proceedings.


bankruptcy prediction, Altman Z’’ model, Zmijewski model, comparative analysis, Serbian companies

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DOI: https://doi.org/10.22190/TEME180619036V


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