POSSIBILITIES FOR APPLICATION OF A BANKRUPTCY PREDICTION MODEL FOR MEASURING CREDIT RISK OF A COMPANY

Among the risks that companies are facing, the credit risk is one of the most serious. The paper deals with the possibilities for the application of a bankruptcy prediction model, based on linear discriminant analysis, for credit risk measuring. Bankruptcy prediction models based on the mentioned method are interpreted by using given values of theirs index. The output of the models is then only conclusion that a given company is or is not threated by bankruptcy. This result is however not sufficient from the view of credit risk measuring. The paper presents an alternative approach for the interpretation of bankruptcy prediction models.