Applying the Discriminant Function (analysis) for Going- Concern Forecasting of Corporations by Some Variables of Basic Financial Statements (Balance Sheet, Income Statement and Statement of Cash Flow)

Discriminant analysis (function) is one of the best instruments to recognize variables affecting to the going concern. This paper seeks to discriminate failed and non-failed corporations using discriminant analysis (function) by some variable of basic financial statements. Sample includes 51 failed and 51 non-failed corporations. In discriminant analysis, wilk's lambda determines affecting variables to discriminate of groups. Then, the discriminant function is getting out. This function is used to discriminate groups to failed and non-failed corporations. The test results proved to be extremely accurate in predicting going concern correctly in 77 percent of all firms in the failed and non-failed groups assigned to their actual classification. Conclusively, The results shows that retained earnings (x1) (from balance sheet) and operational income (x2) (from income statement) are the two most influential variables in going concern prediction.