Performance Comparison of Multiple Discriminant Analysis and Logit Models in Bankruptcy Prediction

In this study, the attention is dedicated to the development of bankruptcy prediction model in Slovak Republic.The presented paper focuses on the comparison of overall prediction performance of the two developed models.The first one is estimated via discriminant analysis, while the another is based on a logistic regression.The sample is made up of 236 firms operating in Slovakia, divided into two groups -failed and non-failed firms.The results of the study suggest that the model based on a logit function outperforms the classification accuracy of the discriminant model.The most significant predictors of impeding firms´ failure appear to be Net Income to Total Assets, Current Ratio and Current liabilities to Total Assets.