Research On The Financial Distress Based On Sustainable Growth For Resource Corporations

As an important component of the industrial economy, resource-based enterprises are the main force for economic development. Presently, resources conservation as the priority of national governance, the growth pattern of resource-based enterprises are facing changes and decisions. In accordance with current development of sustainable growth pattern, the number of resource-based ST,*ST listed company is increasing, ST,*ST are defined as "Financial Distress Prediction" (FDP), which is an key forecast method, has the function of planning ahead. Research on the FDP of Resource-based Enterprises(REs) with the viewpoint of sustainable growth can ensure the safety development of REs in China. Using the financial data of Listed Company, which are the 'top students of REs, We get financial variables by applying CCER and CSMAR data base. Choosing Higgins sustainable growth model, and figuring out the annual SGR of REs based on data base and Higgins model. By comparing SGR with real growth rates g, we can directly get the error between actual value and natural value. We also do research on the error between real growth rates and sustainable growth rates of REs, which is |g-SGR|. Applying Logistic regression model, choosing the definition of financial crisis of Resource-based Listed Company, using the Resource-based Listed Companies from 2003 to 2009 and ST,*ST Resource-based A-share listed company for abnormal financial status as research sample, selecting matching samples of no ST according to the 1 to 2 ratio based on the industry and asset size, applying Logistic regression method, and with the aid of research results of former researchers, we construct the prediction model of financial indicators by selecting explanatory financial indicators, then we introduce the growth rate deviation degree variable to construct the financial distress prediction model of REs. The regression results indicate:sustainable growth rate error has appreciable impact on the companies'involving into financial distress; applying sustainable growth rate error and the prediction of financial indexes, we can get an ideal prediction model of REs. The compute results indicate that nearly 100% of Resource-based Listed Companies have sustainable growth rate error problem. We also analyze the influential factors of sustainable growth rate error, and discover problems of REs at present. According to these problems, we put forward the suggestion of strengthening the management of sustainable growth of REs to avoid financial distress, which means:paying attention to the control of cost to improve the profitability; changing the existing business management mode and thinking; keeping on improve operation ability and efficiency. By doing so, enterprises can improve the profitability fundamentally, and increase their endogenous capital, then make sure that they can come to the goal of sustainable growth.