Abstract
Researchers consider the financial failure of companies as the most important subject. It has negative effects on the company, the employees and the county's economy. Many researches presented models of predicting financial failure of companies. That would avoid the probable financial failure by taking a corrective action. This paper discusses the definitions of financial failure, and it forms and examines the suitability of the models of predicting financial failure as applied to the Syrian companies in order to deduce the most relevant model to be used in the financial analysis of the said companies in order to predict the financial failure before hand. Most industrial companies rely on the basis of historical cost in preparing the financial statement ignoring the great effect of inflation on decreasing the accuracy of accounting data extracted from these traditional statements. Hence, the reliance on these data in financial analysis will necessarily give a distorted picture about the real and fair status of company; which will increase the probability of financial failure in the near or far future. The paper also displays the applied study carried out on a sample of public sector companies by modifying the financial statements for those companies bored on the general level of prices, thus proving the suitability and reliability of data extracted from the modified statement. .
