insolvency prediction

Insolvency prediction involves analyzing a company's financial data to assess its likelihood of becoming unable to meet its debt obligations, leading to bankruptcy or closure. This process uses various financial ratios and statistical models to identify warning signs such as declining revenues, increasing debts, or shrinking profit margins. By forecasting potential financial distress early, stakeholders—like management, investors, and creditors—can take proactive measures to address issues, improve financial health, or make informed decisions to mitigate risks associated with the company's possible insolvency.