Finacial Risk Early-warning Model Of JB Co., Ltd. Based On Grey Systems

In recent years,a large number of engineering research methods have been applied in the field of management practices, providing a technicial method to improve operating efficiency and optimizing management process for enterprises. The depth of the color can be used to describe information.If black means that information is completely unknown, then white and grey can respectively performance information known to all and some known some unknown. Accordingly, the corresponding information system is called "black system", "white system" and "grey system". In the 1980 s, professor Deng julong from Huazhong University of Science and Technology firstly proposed grey system theory which is based on mathematical theory of system engineering. The establishment of this new discipline is quickly applied to various fields of production and management practices. If we look at an enterprise as a system, then this system is an uncertainty system. Similarly, an enterprise’s financial early warning system is also an uncertainty system.Firstly,this paper tries to apply grey system theory to J.B. and establishes a new financial early warning model to improve shortcomings of J.B. ’s existing financial early warning methods. By reviewing literatures at home and abroad,this paper summarizes present financial early warning research.It also briefly introduces the concept of grey system theory, grey correlation analysis,grey forecasting method and the feasibility of the method applied to establish an enterprise’ financial early warning model. And on this basis, the structure of this thesis is determined and research emphasis is expounded. Secondly, this paper analyzes financial early-warning environmen of J.B., the existing financial warning methods and the shortcomings of the existing financial warning methods. Thus leads to building a new financial early warning model based on grey system theory for J.B.. In detail,this new model is mainly divided into three parts: the first part choosees main finacial indicators to put into the new model through grey correlation analysis method; the second part determines each index’s weight coefficient through analytic hierarchy process(AHP) and calculates evaluation score of J.B.,compared with industry standard; the third part predict two future early warning scores using grey forecasting model GM(1, 1).Finally, recommendations are proposed to use well of this new model, including a probation period arrangement, optimization of early warning report process, maintenance of model parameters,model applicability test and dealing with failure of the model.