Abstract: The main objectives of this study is to find out the impact of the financial distress on the financial performance by using 05 years data from the year 2012 to 2016 with the sample of all the 31 listed non-bank financial institutions in Sri Lanka. Therefore, the sample was limited to the 29 of listed nonbanking financial institutions. The current study used two financial performance indicators such as return on asset (ROA), return on equity (ROE) as dependent variables. Whereas, Altman’s Z score and Leverage ratio have used as independent variable’s indicators. This research is mainly focused on the secondary data and those will be obtaining basically from published annual reports in Colombo Stock exchange. The findings suggest that the financial distressed situation has a significant impact on the financial performance of the listed non-bank financial institutions in Sri Lanka.