Abstract: Since 1960s, studies on corporate failure prediction have prevailed both in the United States and in European countries. But few researches on this subject have been conducted in our country until very recently. We make use of the financial statements of companies incorporated in Shenzhen and build a successful model for corporate failure discrimination. We conclude that under current economic and accounting environment in China, financial statements can sufficiently reflect the characteristics of failed corporations. Thus it is feasible to use two linear discrimination functions, which just include four financial rations respectively, to discriminate and predict corporate failure very well.