Positive Research About Financial Distress For Manufacturing Listed Companies In China

Manufacturing industry play an important role in every country and it's the key industry in every modern market economy. At present, most of the ST companies in Shanghai Stock Exchange and Shenzhen Stock Exchange are manufacturing companies and more and more manufacturing companies are suffering from financial distress. Therefore, it's very necessary to find prediction ratios and methods suitable for manufacturing companies to protect them from financial distress.Selecting 27 special treated manufacturing listed companies which are newly added in 2006 and their 27 corresponding manufacturing listed companies which are in formal financial conditions as the comparative samples, the article uses 22 financial ratios based on public accounting date in 2003, 2004 and 2005 to analyze the most important financial ratios for forecasting the financial distress of manufacturing companies. After a series of tests such as Kolmogorov-Smimov test, T test, Mann-Whitney-Wilcoxon test, and collinearity diagnostics, we set up logistic regression model.The article finally concludes that five financial ratios such as growth rate of net assets and net assets per share have very significant effects on judging whether a manufacturing listed company will plunge into financial distress and growth rate of net assets is the most significant one.