Assessment of Bankruptcy Risk in the Construction Sector Enterprises of Georgia

Abstract

This research examines the financial stability of companies operating in Georgia’s construction sector by applying three prominent bankruptcy prediction models: Altman’s Z-score, Springate, and Zmijewski. The study analyzed the financial data of 12 construction firms over the period 2020–2022 to assess their risk of insolvency.

The results reveal that most of the examined companies fall into high or moderate risk zones, indicating financial instability across the sector. While each model uses different financial ratios, there is a partial alignment among the outcomes, reinforcing the validity of the findings. Zmijewski’s model tends to identify higher distress levels, while Altman’s is comparatively more optimistic.

A critical limitation of the study is the lack of accessible and standardized financial data in Georgia, which restricts the models’ applicability and the research scope. Furthermore, these models are based on foreign economic contexts and require adaptation to reflect the specific conditions of Georgia’s construction industry.

The research highlights the urgent need for improved data transparency, local model development, and strategic policy interventions to support the long-term sustainability of the construction sector.