The objective of this paper is to propose an insolvency forecast model based on accounting indicators using discriminant analysis. Although this issue had been thoroughly discussed, there is a need of the existing models enhancement as well as the uncovering of new forecasting variables and techniques that would better describe the behavior of corporation through the credit risk prospective. Regarding the predictive variables of the discriminant function, generated by the stepwise method, the research confirmed the discriminatory power of those variables, which emphasize the financial decisions over asset structure, capital structure and the cash flow related variable. Another important result is related to the discriminatory power of the variable representing the amount of equity. The variable, which is used on studies related to financial institutions solvency, showed also promising results for non-financial corporations. The proposed model, which is statistically significant, represents the result of company's decisions showing a good level of prediction on insolvency forecast, through its independent variables.
insolvency; predictive variables; discriminatory power
