Testiranje primjenjivosti Altmanovog Z-score modela za predviđanje stečaja u Republici Hrvatskoj
Testing the applicability of the Altman's Z-score model for predicting bankruptcy in the Republic of Croatia

Summary/Abstract: Altman`s Z-score model is one of the well-known financial ratios whose purpose is reflected in the possibility of predicting bankruptcy for businesses. The aim of this paper was to test Altman's Z-score model in order to determine whether the model is applicable in the bankruptcy forecasting on the example of Croatian companies. The analysed and tested sample from the Zagreb Stock Exchange was consisted of 52 companies which were divided into two samples: 26 companies which were financially stable and 26 companies that went bankrupt. Sample was observed over the time period 2007–2016 and it was consisted of businesses that do not belong only to the manufacturing sector, therefore it was used Altman's revised Z''- score model. Beside analysing its performance, authors in this paper tried to adjust the weights of the Z''- score model by applying multiple discriminant analysis in order to obtain a model that would be more tailored to the Croatian market. Due to the presence of multicollinearity, not all variables could be retained, and a model with lower performance was obtained. The results of this research indicates that Altman's Z''-score is applicable in the Croatian market, but it is recommended to use it only as an additional, not basic indicator for predicting bankruptcy.

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