Study On Financial Distress Prediction For Listed Real Estate Companies

The real estate industry characterized by long period, high risks, high investment,and high return is a pillar industry of national economy and social development in ourcountry. In recent years, enterprises have faced more and more complex andincreasingly serious environmental challenges because of intense competition. Theadjustment and control of government’s macro policies is becoming tighter. Thedebt-to-assets ratio of real estate developers is above70%universally. Financialcrisis in real estate industry is gradual increasing. The research on the early warningis very important and having practical significance.Firstly, on the basis of summarizing the foreign and domestic research related tofinancial distress prediction, the thesis analyzed the features of the real estate industryas well as the definition, characteristics and causes of the financial crisis. Secondly,used the early warning theory, the paper chose thirty-one variables from financial andnon-financial factors in the listed companies. The next part was the options of thesamples and data. From the significant analysis, fifteen remarkably distinguishedfinancial factors were selected as the early warning indicators. Based on the factoranalysis and the Principle components-Logistic regression analysis, the thesisconstructed the model of financial distress prediction. Thirdly, the part was themodel’s testing, the conclusion and limitations of the research. At last, the thesispresented some measures of how to prevent financial crisis in the real estate business.The empirical study shows that the predicted variables mainly reflected theoperation and management status of the quoted companies. The model can forecast the financial crisis in the real estate industry accurately. The growth rate of net asset,quick ratio, per-share earnings rate of rise, days-sales outstanding, growth rate ofshareholders’ equity, earnings per share, cash ratio and inventory turnover ratio are thedominant factors in financial variables. In aspect of the non-finance, the auditopinion variable has a certain degree of predictability.The innovation of the study is flexible application of the quantitative analysis andqualitative analysis as well as the dynamic analysis and static analysis, especially usingthe quota of cash flow volume and non-finance as the model’s warning variables. Inaddition, the thesis presented the measures of preventing the crisis, that is theestablishment of early warning system on financial crisis. At the same time, byfocusing on the influence of the macrocosm, market and law, it is necessary thatstrengthening the internal and financial management of the real estate enterprises.