A Critical Investigation in the applicability of the Springate z-score Model in predicting financial distress in Textile and Metal Companies of the Tehran Stock Exchange

The study of bankruptcy is becoming more relevant and important as even large companies are failing, that cause economic and social problems to the society. Usingfinancial distress models to predict failure in advance is absolutely essential for most businesses in their decision making process. Hence, this study involves a critical investigation in the applicability of the Springate (1978) z-score model in predicting financial distress in Textile and Metal companies of Tehran Stock Exchange in Iran. The Springate model was however developed in a different economic environment, time horizon, industry and country. Testing this model in Iran context is important to determine its practical applicability and relevance of the model. The study is designed into three sections.