Credit risk assessment is one of the key analyses that provide decision makers with an insight into and the necessary knowledge to face future risks. The primary objective of the credit analysis is to provide future creditors (banks, leasing companies, investment funds ...) with an insight into the probability of default by the debtor taking into account past experience, assumptions about future market developments and the debtor's creditworthiness. One of the first models that was not based on subjective assessment of credit referenders was developed, at the end of the 1960.-s, by Edward I. Altman who conducted the first multi-variate survey which compared the financial indicators and the likelihood of bankruptcy of the observed entity in the medium term (1 to 2 years). Edward I Altman had developed a synthetic indicator that forcasts bankruptcy of companies over a period of one to two years, based on 66 companies that are divided into two groups: healthy companies and those that went bankrupt between 1945 and 1965. The model consists of five indicators, four of which are based on financial indicators while the remaining indicator is based on the market capitalisation of the observed entity. The aim of this graduate thesis is to apply Altman's z-score on a sample of financial statements from small and medium-sized enterprises operating in the Republic of Croatia and to establish the efficiency of using it for assessing the risk of small and medium-sized enterprises in Croatia. Therefore, the thesis of the paper is: “Z-score model enables the prediction of the insolvency of small and medium-sized enterprises in the Republic of Croatia.” The model presented in this paper shows that the hypothesis set cannot be fully embraced because there is a significant level of error in the tested model, but it should be taken into account that the model correctly classifies more than two thirds of the enterprises in the tested sample. 484 small and medium-sized enterprises in Croatia were used as a risk assessment sample. Alongside Altman's z-score, this paper presents some of more frequently used credit risk models, the results of which are compared with those obtained using the z-score model.