The bankruptcy of a company implies the procedure of reorganization or liquidation of a company that can no longer repay its debts. Bankruptcy therefore represents a very complicated process, and due to various and numerous shortcomings in its understanding and implementation, it can last for many years and usually ends with the closure of the company. Therefore, the importance of dealing with this topic, aiming to clarify the characteristics of bankruptcy and the possibilities available to entrepreneurs within the bankruptcy procedure, is unquestionable. The research questions that are attempted to be answered in this paper are related to the determination of the number of companies that have shut down due to bankruptcy in the Republic of Croatia, and whether it is possible to predict the financial failure of a company based on data from the balance sheet and profit and loss account, and with what precision. In addition, this paper aims to determine the characteristics of bankruptcy proceedings in the Republic of Croatia and whether entrepreneurs initiate them in a timely manner when all the conditions for this occur. After defining the basic terms, the available financial reports of the selected companies were analysed with special reference to the application of financial analysis and models for predicting bankruptcy on the example of five selected companies from the construction sector in the Republic of Croatia. The companies and the sector were selected due to the existence of certain financial difficulties in its business, and the financial analysis and models for predicting bankruptcy were selected considering that one of the problems associated with the bankruptcy procedure is the inadequate analysis of financial statements, which can be an early warning of potential difficulties. Based on the available information, a detailed analysis of the basic financial statements is provided and Altman's Z-score and Bonitest models for predicting financial failure are tested. The paper is trying to determine how much the analysis of financial statements and the use of the mentioned models provide an early signal of serious financial difficulties. In this paper the share of companies that initiated bankruptcy was determined, as well as the significant decrease in number of bankruptcy cases from 2017 to 2022, which points to the efficiency of Commercial courts, but also to the better management of the companies. The Bonitest model and Altman's Z-score proved to be successful in predicting financial difficulties on the example of selected companies, while although Atlman's Z-score proved to be more accurate in predicting bankruptcy.