Based On Financial Crisis Early-warning Research F Fraction Model

The prediction of financial distress has always been an important research topic in both academia and practice. Company will meet all kinds of difficulties in the business as well as people will be sick, and financial crisis is an important one of these difficulties. If the companies do pre-found financial crises, the financial crisis will be nipped in the bud, and it could make the company develop health. If the companies do not pre-found financial crises, a large extent will be caught in the financial crisis, and even bankruptcy. Therefore, the establishment of the financial crisis early warning system and the healthy development of enterprises is closely related. The characteristic of each industry is more and more obvious for the division of labor is continued to refine. So, to establish its own financial crisis early warning system for all industries is imperative.Pharmaceutical industry is as well known as the "eternal sunrise industry". In developed countries, the pharmaceutical industry has a high-tech, high-risk and high-returns characteristics, with high barriers to entry and strong monopoly. Their main risk is the risk of R&D, because of the long time research, large cost of the initial investment and the slow recovery of funds. But once the research is put in production they can get huge gains. In comparison, the pharmaceutical industry in China has low barriers to entry and weak monopoly. Once the marketing has problems, it is easy for an enterprise to fall into financial distress. To establish a financial crisis early warning system, which is aimed at the pharmaceutical industry, is great significance for operators, investors, creditors and other stakeholders.This paper starts from the characteristics of the pharmaceutical industry of China, summarizes the financial characteristics of the pharmaceutical listed companies, analysis the cause of the financial crisis of the pharmaceutical listed companies in our country and selects representative samples. By the standard as weather be special treated, I chose7ST companies as a group of financial crisis, and select a group of7non-ST as the financial position of the corresponding health. According to the characteristics of China’s pharmaceutical industry, I chose the sample representative of the financial indicators from2008to2010, and filter the indicators according to significant analysis and multicollinearity analysis. Finally, I established a new F-score model on the basis of five indexes. They are the net profit margin of cost, accounts receivable turnover ratio, current ratio, the growth rate of net profit and operating cash flow rate of return on assets. Then I took the indicators from2008to2010into the new F-Score models to test weather the new model is useful. The results showed that there were only2positives. Then I took7ST company and93non-ST company’s data from2011into new F-score model, and I got a very good result. Thus, the model that this paper established is effective.However, the lack of data and research abilities results in the problems of the sample selection and handling, the breadth and depth of research, non-financial indicators’ leading and some new factors’ impact, which makes the research still insufficient. Studies on these issues in future will be very meaningful.