Research On The Prediction Model Of Financial Distress Based On Financial And Non-financial Ratios

With market economy system reform deepening and capital market increasingly developing in china, the competition which the companies face is more and more vigorous. The amount of the companies which sink to financial distress (FD) increases very rapidly because of many different reasons, and the requirement of researching the problem of financial distress becomes more and more eager.Based on the review of correlative researches home and broad, this paper discussed several issues such as how to choose ratios, how to construct model. Previous studies always analyzed the financial distress focal on the single industry and financial ratios, but ignored the very important non-financial ratios. After a lot of researches of domestic scholars, we find that there are some remarkable difference between the FD listed companies and the non-FD ones. Because any financial distress is a gradual process, we emphasis on the year T-2. In the process of constructing the model, we consider not only the static and dynamic ratios, but also the non-financial ratios, at last construct a multiple model.We choose 79 ones as FD companies which were special treatment(ST) because of two-year loss in 2003-2005, and under the approach of the similar capital,the same industry,one-to-one sampling, 79 ones were defined as non-FD companies for the matching sample, which add up to 158 ones for the research. Firstly, analyzing the difference in 14 financial ratios, also with the factor analyze, then choose 6 factors to construct the logit model i; secondly, analyzing the difference in 6 non-financial ratios, then choose 2 ones to construct the logit model 2; thirdly, construct a multiple model 3 based on the former analyze. At last, the predict result indicates that the predicting accuracy of model 3 is higher than model 1 and model 2, model 2 has predicting ability in some degree.