BUSINESS INSOLVENCY PREDICTION MODELS: A COMPARATIVE ANALYSIS OF MULTIVARIATE DISCRIMINANT ANALYSIS AND LOGISTIC REGRESSION

Аннотация

This study explores at the financial analysis techniques used on insolvent businesses in different countries, using Russia as an example. It finds significant deficiencies in the current regulatory structure put in place by the government. Even though business bankruptcy is uncommon, theeconomic effects on different stakeholders makea thorough analytical approach to evaluating financial distress necessary. The study highlights the outdated nature of the current financial analysis rules and their inconsistency with modern financial reporting standards. In terms of insolvency, it examines the specifics of examining both accounting and tax reporting. In order to improve decision-making in bankruptcy procedures, the article promotes a more thorough methodology that incorporates dynamic analysis and predictive modeling by assessing coefficient analysis methodologies and the informational potential of tax reporting. Key words: insolvency, financial statements, accounting, tax reporting, ratio analysis, coefficients, profitability, balance sheet, dynamic analysis, assets, investment, ledger. Introduction. Corporate bankruptcy is a rare event. According to statistics, the number of bankruptcies does not exceed 0.3% of registered Russian organizations [1]. However, the insolvency of an enterprise, especially in the case of medium and large businesses, affects the interests of many parties, which is naturally reflected in the literature. The phenomenon of corporate bankruptcy is studied in legal, sociological, psychological, and economic contexts. Significant attention is paid to the financial aspects of insolvency: the methodology for forecasting bankruptcy is being actively improved, and the theory and practice of managing high-risk investmentsare developing [2]. A relatively new scientific direction is the financial theory of corporate bankruptcies, which addresses the problems of financial restructuring, assessment of direct and indirect costs of insolvency, and comparative analysis of financial models for default resolution [3]. Financial analysis in the context of insolvency is characterized by significant specificity; however, its content is primarily determined bytherequirements ofbankruptcy legislation. In Russia, the financial analysis of insolvent organizations is regulated by special rules approved by a resolution of the Government of the Russian Federation (hereinafter referred to as the Rules). Surprisingly, given the constantly changing legal climate, this methodology has not been revised for more than ten years, despite obvious shortcomings and numerous inconsistencies with current legislation. Literature review. Criticism of the Rules is widely presented in publications by domestic authors [4, 5, 6, 7, 8]. In general, it is noted that the existing methodological support does not allow for making economically justified decisions on the choice of bankruptcy procedures [9]. page629 INTERNATIONAL JOURNAL OF ARTIFICIAL INTELLIGENCE ISSN:2692-5206,ImpactFactor:12,23 AmericanAcademicpublishers,volume05,issue06,2025 Journal: https://www.academicpublishers.org/journals/index.php/ijai The heightened discussion on this issue is related to the publication of the draft Federal Standard for the Activities of Arbitration Administrators concerning the Financial Analysis of Insolvent Debtors (hereinafter referred toas theProject) [9,10,11]. In their research, the authors address the specifics of analyzing insolvent enterprises based on accounting and tax reporting. It should be noted that the methodology of accounting reporting analysis is sufficiently detailed in the literature, including great attention is paid to the correspondinginformation capabilities and limitations [12, 13,14]. At the same time, works devoted to the specifics of analyzing accounting reports under conditions of insolvency are not so diverse and numerous. As for the analysis of tax reporting, this issue is generally not addressed, whereas, from the perspective of the authors, it is of significant interest, especially from the standpoint of internal analysts, to whom arbitration managers also belong. We examine the challenges in developing a methodology for analyzing a debtor's financial statements, taking into account the provisions of the current regulations and the draft federal standard. Additionally, we will propose recommendations for the analysis of tax reports. Methodology. The study evaluates the methods used in financial analysis of insolvent enterprises, and focuses on the existing government-approved rules and some standards. The methodological framework includes assessing ratio analysis techniques, analyzing financial statements, developing an enhanced coefficient system, assessing the informational potential of tax reporting, and qualitatively analyzing reporting formats and audit data. Additionally, there is, also, evaluation of a normative content in order to identify contradictions between existing guidelines and practical needs