bankruptcy prediction model

A bankruptcy prediction model is a tool used to assess the likelihood that a company will become insolvent. It analyzes financial data, such as revenue, debt levels, and cash flow, using statistical techniques or machine learning algorithms. By identifying patterns and warning signs in the financial health of a business, the model helps investors, creditors, and management make informed decisions. Essentially, it serves as an early warning system to gauge potential financial distress, enabling stakeholders to take proactive measures to mitigate risk.