Study On Financial Early Warning System Of China's Real Estate Enterprises

Real estate has double characteristics of entities economic and virtual economic. The rise and fall of government departments at all levels, financial institutions, developers, consumer groups and other stakeholders are closely associated with the health of the real estate industry. Whether the high tide of industry development or low tide, it is a focus study concerned with all parties to effectively prevent the crisis of overheating development or recession on real estate. Crisis of enterprises is a gradual process. The different stages of the crisis in the general level could be reflected by the deterioration degree of the financial situation of enterprises. As a result, the means of financial early warning are widely used in business forecasting and crisis prevention measures. At this stage, China's theorists have made relatively little study on the financial early warning of Sub-sectors enterprises. Timely and accurate analysis of financial early warning to real estate enterprises is not only the objective need of the competitive market of real estate, but also the need of the survival and development of real estate enterprises.Based on the above, this article carried out a study to explore the financial early warning of China's real estate enterprises. The research was based on the analysis of related risks of real estate enterprises. It found the appropriate financial indicators for the description of the risks. And then it used the financial model of early warning indicators to assess the financial situation of enterprises, in order to help decision-makers to take appropriate and effective measures in a timely manner.Firstly, this article made a review and comparison of both domestic and abroad theoretical studies on financial early warning, and then it worked out some enlightenment of relatively advanced research in the field. Secondly, it analyzed the features of financial risks which existed in the process of running by using domestic and foreign advanced theory of financial early warning, combined with the operating characteristics of real estate enterprises. Thirdly, it selected 65 typical samples of real estate listed enterprises in China's Shanghai and Shenzhen stock markets. And then it comparatively analyzed ST companies and non-ST companies by principal component analysis. And it built out the current financial early warning model of the real estate enterprises with the corresponding index of early warning, to test the effectiveness of the model. Fourthly, it developed some appropriate preventive measures to the real financial risks faced by the real estate enterprises combined with the assessment results of the model. Finally, it summed up the empirical research findings of financial early warning in real estate listed enterprises. And it pointed out the problems and lack of empirical studies, making a clear direction for further research.