Financial Distress Management And Forecasting Model

Finance is backbone of business working, and well financial management is base of enterprise's development. But modern enterprise will often meet financial distress in complex and changeful market environment. If dealt with improperly, financial distress will not only effect enterprise's daily work, but also result in bankruptcy when gravely. So how to discover, prevent and solve financial distress becomes a important content of financial management. At present, most of enterprises in our country still haven't enough consciousness of financial distress, and studies about financial distress are still in primary phase in academe. Under these circumstances, studying financial distress has universal significance.Using the method of qualitative analysis and quantitative analysis, this paper systemically analyses financial distress, and forms content frame and procedure. Firstly, the paper defines the connotation of financial distress, and analyses it's reasons from respects of market, competition and management, then points out that bad management is chief in all reasons. Secondly, thepaper analyses signs which appear before financial distress, and introduces methods of distinguishing financial distress, then builds a forecasting model based on financial data of listed companies in our country. Thirdly, the paperdiscusses preventive measures from respects of common prevention, technicalprevention and perfecting financial mechanism, and points out that confirmingreasonable liability scale and optimizing capital structure is important measures in preventing financial distress. Lastly, the paper puts forward solving countermeasures from respects of business reforming and bankruptcy. The paper considers that the best method is financial reforming for enterprises that have fallen into financial distress.