The study examines main determinants of financial distress of companies in Poland during the recent transformation period. The data compose a sample of 1995-97 annual financial statements of 200 unlisted companies in Poland. The sample was collected by the Institute of Economics of the Polish Academy of Sciences. Degree of financial distress is expressed either by the binomial variable with the following states: (1) the company in financial distress, (2) the company financially sound, or by the trinomial ordered variable with the inconclusive state between (1) and (2). The attempted models explain the distress variable (binomial or trinomial) for 1997 by the financial indicators evaluated on the basis of financial statements from previous years (1995 and 1996). The models applied to the data are binomial logit model and trinomial ordered logit model. The results of the research are presented in a number of estimated binomial and trinomial logit models. The results are sensitive to the choice of explanatory variables. The forecast accuracy of the estimated models lies in the range of 80-90 percent. Paper gives some evidence to the idea that in the second half of the nineties the financial condition of companies in Poland was determined by the degree of liquidity, profitability and the level of financial leverage.