The Positive Study On The Financial Distress Prediction Of Listed Companies

With the rapid development of the stock market in China, the listed companies grow in quantity and scale, the composition and operation of them getting better.Compare the listed companies with the traditional enterprises or general companies, the listed companies have some advantages, such as better achievement, bigger scale, stronger financing ability and expanding ability, the listed companies have supreme vitality and developing potentialities in the modern market economy.More and more investors invest in stock market, not only the listed companies get deficient money, but also investors get earning from the investment.But, some listed companies plunge into financial distress because of some reason, their operating achievement decrease year after year, they were called "special treatment"companies because of abnormal financial position, maybe they would be faced with the danger of withdraw from the stock market.If the listed companies plunge into financial distress, not only the investors and creditors would suffer for it, but also the validity of the resource distribution would be affected.It is not occur suddenly to plunge into financial distress, But it is a gradual process. It is desirable for all related insiders and outsiders to discern all potential risk in advance.This paper, with the adoption of special treatment resulted from abnormal financial position as the indicator of financial distress, the univariate variable analysis and multiple variable analysis as the research approach and some financial ratios as variable, tries to find an optimal financial distress prediction model of Chinese manufacturing listed companies based on public accounting data.Our finding demonstrate that five general financial ratios and three ratios concerning the cash flow have better predicting ability, the erroneous classification ratio are low. These five general financial ratios are earning per share, return on net assets, return on gross assets, growth rate of net profits, growth rate of net assets; the three ratios concerning the cash flow are net cash flows from operating activities per share, net re-earnable cash flows/current liability, net cash flows from operating activities/net profit. In the multiple variable analysis, get two discriminant models by applying the Fisher discriminant analysis and Canonical discriminant analysis, in the Canonical discriminant analysis, find best cutoff by two methods. By this way, the models have a high classification ratio to predict the financial distress.