The Enterprise Creditworthiness Evaluation – By Z” Score Model

There are numerous models which are under contemporary business conditions used for assessment of creditworthiness and forecasting bankruptcy possibility of a enterprise. One of these models is Altman Z – score model. On the basis of adjustments of original model for possibility of bankruptcy forecasting, which is applicable just to enterprises with whose stocks are traded on organized market, a modified model was developed which is applicable only to enterprises with whose stocks are not traded on organized market. Altman made additional modification of model and formulated Z’’ score model that is applied on production and unproductive enterprises, as well as on enterprises that operate in developing countries. Stated models separate financially successful enterprises from those that are threatened by bankruptcy proceedings. On the basis of Z’’ score model Altman classified credit rating of enterprises and with it developed Z’’ score adjusted model. In this paper, we conducted the analyses of credit rating for 33 enterprises in restructuring and 90 enterprises that are not in restructuring, by using Z’’ score adjusted model, as well as determined possibility of occurrence of bankruptcy of enterprise on the basis of Z’ score model. Authors concluded that approximately 57% of analyzed enterprises in restructuring have the lowest credit rating, while possibility of occurrence of bankruptcy in the next two years for those enterprises is more than 90%. On the other hand, approximately 60% of enterprises which are not in restructuring have high credit rating and operate in safe zone, while approximately 6% of enterprises have the lowest credit rating with high possibility of occurrence of bankruptcy in the next two years.