An Empirical Study Of China’s Real Estate Listed Companies’ Financial Crisis Warning Based On Z Model

After decades of development, China’s real estate industry has developed rapidly and driven the development of dozens of industry of our country, becoming the pillar industry of our national economy gradually and especially playing an important role in promoting the rapid growth of the national economy and people’s living conditions. Although as a fast developing pillar industry of the national economy, investment in the real estate market often has a larger investment risk because of its capital-intensive structure, high degree of association, long turnover cycle, high risk and high investment characteristic. With its development funds mainly coming from bank loans, fund of presales, equity financing and other commercial loans, the real estate industry’s financial risk goes higher. High rate of assets and liabilities and borrowing costs requires enterprises to improve solvency, which restricts business activities of enterprises to a certain extent, thus affecting its profitability. More seriously, it may result in capital chain rupture and risk of running behind one’s expenses. Therefore, it has important practical and theoretical significance to adopt certain methods to analyse the formation of the financial risk of real estate market.Till now, many scholars at home and abroad have done plenty of experiments on this subject. Based on these results, we choose the Z model in this paper, which was widely used in practical study. As the financial indicators of Z model are mainly based on the accrual basis and used in static, so we adds two analysis indexes of cash flow on this model, which can measure the financial risk of the enterprise more exactly. The research object of this thesis are118real estate companies which are listed on the Hu and Shanghai Stock Exchange market, with their financial report data from2009to2011as calculating basis,we plan to finish our research based on EXCEL office software.The empirical results show that, the Z model of Altman in the prediction of China’s real estate enterprise financial risk is not applicable, the critical value of Z model is too high, and this is consistent with other scholars’study conclusions. In this paper, we try to modify the critical value of the Z model, and then to verify the new critical values for2009,2010and2011data, finally try to prove that the new critical value has high accuracy, finding the new critical value of Z model that fit our country’ real estate listing Corporation.Combined with the new Z value analysis, when the company is in a different value for the Z area, analysis of the company existing problems and solutions to be taken. Combined with the cash earnings quality and cash value added quality rate, we can test the financial risk of real estate listing Corporation, and then we can try to get more precise result. At the same time, we can predict the value range of cash earnings quality index and cash value added rate of real estate listing Corporation in normal state.