Vol. 2, Issue 3, Part K (2016)

Abstract
The major objective this paper was to predict corporate failure of twelve manufacturing firms in Zambia using data from 2000 to 2005. The logistic model developed, used six financial ratios for predicting corporate failure. Out of the six ratios, asset utilization and profitability ratios were found to have significant strongest effect on corporate failure in Zambia. Analysis showed that those firms which managed their assets well and had good profitability ratio had higher probability of not failing while those firms with poor asset management had higher chances of failing. And likewise, less profitable firms were more likely to fail than profitable ones. In terms of prediction the model correctly classified 86.67% of non-failed firms and 73.33% for the failed firms.