Application of the Bankruptcy Models in the Teaching of Financial Subjects

Research background: In a modern economy, ensuring a business' financial stability, and increasing its competitiveness, has become especially difficult. To measure firms' economic sustainability, researchers need to connect traditional and modern metrics. Monitoring the company's financial situation and predicting its future development becomes important. Therefore, searching for applicable models to predict bankruptcy is important not only in scientific research, but also in the practice of business entities. Purpose of the article: The aim of the paper is to apply selected bankruptcy models in the teaching of financial subjects. The intention is to compare individual bankruptcy models and their use in teaching financial subjects. Methods: The paper will focus on the comparison of models that were created using multivariate discriminant analysis, logistic regression, and neural networks. Findings & Value added: In business management, it is important to understand the financial and economic situation and react promptly in the event of impending danger. Various simple models, more complex statistical functions, and artificial intelligence have been used to predict bankruptcy. Financial analysts should simultaneously use multiple methods to compare the results. Managers and business owners can use this paper to guide their firms and inform future business plans.