Abstract: Based on financial situation, this article divides China’s listed companies into five statuses, namely, excellent, the stable, deteriorating, seriously deteriorating and bankruptcy or waiting for delisting. Next, this article calculates the annual transition probability of China’s listed companies from year 1994 to 2007, on the basis of which a one-year transition probability matrix is launched. Finally, it analyzes the average survival time of the listed companies at each inancial stage and the average time from each financial stage to bankruptcy or delisting.

Key words: financialdistress, financialstage, survivaltime