The Effectiveness of Cash flow patterns and genetic programming Model in Predicting Financial Distress

Bankruptcy of companies is one of the ways which cause the resource to be wasted and the investment opportunities to be faded. Financial Distress Prediction, by providing necessary warnings, can make the companies aware of financial failure and consequently of bankruptcy. In this way they can, take necessary measures, and investors can distinguish between desirable and undesirable opportunities for investment too. Moreover, it will be possible for them to invest their resource in an appropriate time and place. One of methods going concern companies prediction, use of financial distress prediction models. In this present research valuation the effective cash flow patterns and genetic programming model in predicting financial distress of the firms accepted in Tehran Stock Exchange (TSE), duration 6 years period (1381-1386) examine by use data of 82 companies. The combination of cash flow patterns represents firm's resource allocations and operational capabilities interacted with their strategy choices. Predictions about each individual cash flow component (operating, Investing, financing) are derived from economic theory, which forms the basis for the life proxy. In this present research use of cash flow patterns in the decline stage and then result of these patterns compare with genetic programming model. Result of this research indicate cash flow patterns can predict financial distress companies in Iran, Also result this research show that the effective genetic programming model in prediction financial distress is  more than cash flow patterns.