A Study On Financial Forecasting Of Listed Companies Based On Catastrophe Theory

In the last 13 years, China's Stock Market has developed rapidly. However, with the development of the market, the listed companies have exposed more and more problems. Many of the listed companies have experienced financial distress or bankruptcy. If we can predict the financial distress of the listed companies in advance by using financial forecast model, it will be significant not only for supervisory organizations, banks and investors, but also for the listed companies themselves.Since 1960s, researchers from different countries try to predict bankruptcy through quantitative analysis. In the recent 50 years, many models such as Multivariate Discriminant Analysis and Neural Network model come out. However, in our country, financial distress prediction has just begun.This study innovatively applied the catastrophe theory to the research of the financial forecast system. The objectives were the listed companies in China's Stock Market. The study regards companies received Special Treatment (ST) because of financial disorder as a signal of financial distress. The researcher applies the catastrophe theory to establish the financial forecast model to predict the financial distress. The study indicated that the average prediction ratio from 2002 to 2004 is 90.80% and 91.30% for 2005. At the same time, it is found that return on assets, return on net assets, operating income rate, rate of profit based on the cost of production and expenses, assets turnover rate, current assets turnover rate, accounts receivable turnover rate, fixed assets turnover rate, ratio of cash and current liability, asset-liability ratio, current ratio, accumulation rate of assets, growth rate of total assets et al. can predict financial distress accurately.This study consists of five parts. In Chapter 1, the background and significance of the study are introduced with the past studies and the research approach. Chapter 2 introduces theoretical research on the financial forecast model, including forecast theory and catastrophe theory. Chapter 3 analyzes the ratiocinates catastrophe models. Chapter 4 is the empirical research. Chapter 4 is the conclusion.