Research On Financial Early Warning Model Of Listed Companies On Growth Enterprises Market In China

The first 28 companies stocks listed on GEM board of Shenzhen Stock Exchange on October 30, 2009, and so far the number of companies and assets has experienced a rapid growth. The GEM is playing an increasingly important role in the multi- level capital market system in our country. The GEM serves for independent and innovative enterprises, because of its low market access threshold, making the GEM listed companies on the whole present a small scale, relative lack of funds and unstable profit performance, besides the intense competition in emerging industry increases the probability of the financial crisis, so there is great significance to strengthen the financial early warning of the GEM listed companies, and the prediction about the financial condition is important to company’s own stable development and also to stakeholders.This paper takes the knowledge of economics and financial management as theoretical basis, is on the basis of relevant academics’ research, collects and refers to lots of literature. Through analyzing the domestic and foreign scholars study, and considering the situation of suspending company listing has not happened in the GEM, the financial situation of listed company is measured by return on equity for the 2012 and 2013 two consecutive years, in this principle, selecting 52 companies which do well financially and 52 companies which do worse financially as the research sample. Selecting 32 companies in good financial position and 32 companies in weak financial position at random as the samples for modeling, and taking the rest of 20 companies in good and 20 companies in worse as the samples for testing. Concerning financial index selection, the text chooses profitability, the interests of shareholders, solvency, operation ability, growth ability, cash flow ability and non-financial index totaling 29 indicators to build index system of early warning model, and making significance test and correlation test about the index. Finally,selecting operating margin, operating income to total assets ratio, undistributed profit per share, security of debt, total assets growth rate and shareholding proportion of the first ten shareholders as the ultimate variables of the model for financial forecasting. Based on Bayes discriminant principle, classifying variable to the group which has a high probability, building financial early warning model through Discriminant Analysis in SPSS, the model judges correctly 29 of the 32 worse financial companies in modeling samples and misjudge 3, recognize 30 of the 32 weak companies and misjudge 2. In the samples to be used for testing, the model judges correctly 19 of 20 in the good financial groups and 17 of 20 in the worse financial groups, the model approaches 91.3% judgment accuracy of the samples including 104 companies. The financial early warning model is applied to analyzing the financial condition of the growth enterprise market, nearly half of the companies show a poor financial situation, and the contact ratio reaches 75% compare with the companies which return on net assets are below the average of GEM in 2012 and 2013 the two consecutive years.