The Cost—benefits And Accuracy Analysis Of Enterprises' Financial Early Warning

Enterprises are complicated. Decisions making in business or crises encountered are eventually reflected in the company's financial indicators. Therefore, by monitoring the enterprise's financial indicators and studying financial early-warning system can theoretically grasp financial situation of enterprises and then master the business operation situation. When the crisis is forecasted, operators can prevent crises and avoid business losses through appropriate control measures.Since the single variable model was born, there are many types of early warning models now. Generally the models are divided into single-variable model, multi-variable model, logic model, artificial intelligence model. Many scholars used empirical study on the financial early warning, and they were mostly concentrated in the sectors of finance, banking, and manufacturing. Because there are many company samples in these industries and the sample size is adequate to support a good empirical study. They barely set foot in the real estate industry, and few scholars were concerned about the cost, benefits and the accuracy of the financial early-warning and the relationship between them. But both these two points are very important, on the one hand, the real estate industry related to a large number of interest groups, its rise and fall even relate to the entire community's economic situation, we can't ignore this; On the other hand, the cost-benefits and accuracy of financial early-warning are measures to judge the financial early-warning system good or not, and the balance of them is the final goal of financial early-warning system. Based on these, this paper will analyze the costs and benefits of financial early-warning in real estate industry which has been less researched and studied, and use empirical analysis on three kinds of more representative financial early-warning models to verify which of them is the most accurate in real estate companies in China, and then, this paper proposed the measures to control cost and improve profitability.Firstly, the author has carefully read the results of previous studies based on the costs and benefits of financial early warning and summarized them; Secondly, the paper used the financial data of real estate companies in 2007 and 2008 to analyze the financial models in order to find out which model has the highest accuracy; Thirdly, this paper this paper proposed the measures to control cost and improve profitability; Lastly, the author summarized the results of research, set out the shortcomings and suggested improvements for future researches.