- Inability to discharge a contractual obligation or inability to fulfil obligations to creditors make a corporation or company insolvent. Different financial ratios are used as independent variables in bankruptcy prediction models, which are built using various statistical methods. For the prediction of default companies, we have used Altman model and Ohlson which gives us a brief figure and result that this method can be used for prediction of failure firms and according to analysis the study shows that the Ohlson’s model shows the strongest overall results.