Bankruptcy for a company is a final declaration of its inability to sustain current operations given in its current debt obligations. Practically all firms must have source debt, load to expand operations or just to survive. Business failure is a major concern to the parties involved and can create high costs and heavy losses, due to this predication is highly beneficial. If bankruptcy could be predicted with reasonable accuracy ahead of time, firms could better protect their business and could take action to minimize risk and loss of business and perhaps even prevent the bankruptcy itself. The Indian textile industry is one of the leading textile companies in the world. It largely depends upon the textile manufacturing and exports, IBEF Report on Textile Industry and market Growth in India assesses the Indian textiles industry, currently estimated at around US$ 108 billion, is expected to reach US$ 223 billion by 2021. The industry is the second largest employer after agriculture, providing employment to over 45 million people directly and 60 million people indirectly. The Indian Textile Industry contributes approximately 5 per cent to India’s Gross Domestic Product (GDP), and 14 per cent to overall Index of Industrial Production (IIP). High interest rates, demand, mismanagement and power costs are the major factors that which leads to bankruptcy of textile companies. The specific aim of this research paper is to predict the financial health of the selected textile companies of Southern Rajasthan. One of the most commonly used statistical ratio models for predicting business distress is Altman’s Z-score Model. A sample of 05 textile companies was selected randomly from South Rajasthan to conduct the present research.
