• Miroslav Čavlin University Business Academy in Novi Sad, Faculty of Economics and Engineering Management in Novi Sad
  • Rajko Tepavac University Business Academy in Novi Sad, Faculty of Economics and Engineering Management in Novi Sad
Keywords: solvency, balance sheet models, SMEs, rural areas


Prediction of company solvency is a current topic in theory and practice. The main focus is on Altman's Z-score model, which provides an acceptable and simple analysis of the overall company profile, while the possibility of applying other balance sheet models has been neglected. In modern conditions, the precautionary principle dictates, that in the bankruptcy prediction, the outcomes of several different balance sheet models should be always taken into account. Therefore, the paper focuses on the analysis of the corporate solvency using the most basic Altman Z-score, as well as on understanding the applicability of Zmijewski and Chesser balance sheet models. The aim of the paper is to integrate, in an efficient and relevant manner, the limited propositionalability of the Altman's Z-score with an integrated solvency analysis for a more reliable prediction of the solvency of small and medium-sized companies (hereinafter: SMEs) in rural areas of Serbia. The research findings affirm the feasibility of the application of balance sheet prediction models for signalling insolvency in our business practice, through implementation of the integrated methodology of classic balance sheet models, thus creating a more reliable and objective support for the prognosis of survival by means of the growth and development of SMEs in the rural areas.


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How to Cite
Čavlin, M., & Tepavac, R. (2020). POSSIBILITY OF APPLICATION OF CLASSICAL BALANCE SHEET MODELS FOR PREDICTING SOLVENCY - THE CASE OF SMEs IN RURAL AREAS OF THE REPUBLIC OF SERBIA. Tourism International Scientific Conference Vrnjačka Banja - TISC, 5(2), 506-523. Retrieved from http://www.tisc.rs/proceedings/index.php/hitmc/article/view/387