Risk of financial failure is defined as the inability of a firm to pay its current liabilities. Financial failure may lead firms to bankrupt or go into liquidation. This paper aims to develop reliable model to identify the financial failure risk of the firms listed on Istanbul Stock Exchange National-All Share Index. In line with this goal, we calculate 20 financial ratios to predict the financial failure of firms and develop the most reliable model by analysing these ratios statistically. As a result of the analysis using these 20 financial ratios, it is identified that there are 5, 3 and 4 important financial ratios in the discrimination of the successful and unsuccesful firms in 2009, 2010 and 2011, respectively. Thus the discriminant function is formed by using these variables. Capital adequacy and net working capital/ total assets ratios are seemed to be significant in all three periods. According to formed models, classification success are determined as 88,7% 90,4% and 92,2% in 2009, 2010 and 2011 years respectively. These high accuracy ratios indicate that the developed models for three years are efficient to determine the financial failure of the firms traded in Istanbul Stock Exchange.