| With the quickening of global economic integration paces? entities of our country, while meeting opportunity for development would also face fiercer market competitions. Where there is competition, there is risk. As various kinds of risks that enterprises face gather to a certain extent if the enterprises cannot take the measure in time, they will fall into the financial distress. It is a course worsened progressively that enterprises get into a difficult position. This usually could be found out from the financial affairs. In right time, accurate carrying on early-warning analysis to entities’ financial affairs is the objective requirement for the market competition system.Financial early-warning system can reach the other shore to play a role in escorting for entities’victory. Foreign academic circles on the financial early-warning system has done a lot of research, mainly focusing on how to conduct the financial early-warning method of analysis and early-warning models and indicators research. The domestic study on financial early-warning, are both a weakness no matter theoretically or on practice. Domestic financial early warning systems research need to be developed both in theory and practice.FCF has been made out about20years ago. But the studies of FCF have mostly been limited in the field of enterprise value assessment, financial performance evaluation and dividend distribution decision-making. Domestic and foreign scholars seldom use FCF in financial early-warning model theoretically or on practice. On the basis of analysis of related research at home and abroad, FCF have been introduced in financial early-warning model in this paper. The aim of this paper is to build a more effective financial early-warning model.There are five parts in this paper:The first part is the introduction, which introduces the research background and the significance of this paper, as well as research purposes and methods of this paper. The second part is the related theories of financial early-warning, including the concepts of finance distress, current models on financial predictions, research at home and abroad; The third part is how to create a new financial prediction model per free cash flow. At first of this part is the related theories of free cash flow, the research of overseas and domestic, the advantage of free cash flow compare to the accrue ratios; given a system of free cash flow ratios; then is the method, thoughts, samples, comparative samples for the creation of the model. This paper selected in2009and2010prior to the listing of15companies by ST as research samples, according to asset size is similar to the same principles the industry selected15non-ST companies As a pair study sample, through the non-parametric tests and linear correlation analysis of the30company of the16indicators have been tested to exclude the non-complying10indicators, eventual selected six indicators incorporated into the logistic regression model to arrive at Based on FCF determine the accuracy of higher financial early-warning model and the model was tested determine effects. Part four applied the model into the listed companies of H company for empirical research and have a good result. Part five is the conclusion and recommendations. According to theoretical description and empiric analysis of the former parts, the financial early-warning model can be used to make an accurate prediction for the entities in financial crisis. At last, per the status of our country, I recommend that we could add the free cash flow ratios into the early-warning system. |
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