Abstract
<jats:p>This paper examines the financial state of small and medium enterprises (SMEs) in Serbia during the COVID-19 pandemic, utilising both the Grover model (G-Score) and Altman Z-Score for bankruptcy prediction. The study aims to assess bankruptcy risks, provide insights into financial stability, and identify strategies for mitigating the negative impacts of the pandemic. Quantitative research with a descriptive approach was conducted, analysing data from 380 SMEs registered with the Serbian Business Registers Agency (SBRA) for the period between 2019 and 2021. Additional qualitative insights were gathered from a stratified subsample of 40 respondents. The Grover model revealed that 10.5% of SMEs were at high risk of bankruptcy due to poor financial operations, while the Altman Z-Score provided complementary evaluations of financial stability. Results showed that 85% of SMEs maintained operations, aided by government support measures, despite 50-60% experiencing liquidity issues and 15% laying off employees. The findings highlight the adaptability of most SMEs, as they implemented crisis management strategies and adjusted business models to mitigate risks. These insights are critical for understanding the resilience of SMEs and formulating strategies to strengthen their financial health during future crises.</jats:p>