Study On Financial Distress Prediction Of The Manufacturing Listed Companies In China

The manufacturing industry is the foundation of the national economy and the main part of the whole industry. With the increasing competition, and together with the influence of economy crisis recently, many manufacturing listed companies can not work as usual and even are in danger of bankrupcy. Consquently, it is an issue which companies, investors, creditors focus on that the way an effective model is established to estimate whether the financial distress will take place.Firstly, according to the standards we pick out 20 crisis companies and 20 healthy companies between 2007 and 2009 from the manufacturing industry. We analysis the reasons of failing into financial distress and creat a system of indexes in a court of the reasons above. Secondly, through the normal distribution test, the nonparametric test and the principal components analysis, we choose 5 principal components and set up the logistic muitiple model. There is a good predicting ratio of the model through several tests. Finally, a number of proposals about application are brought forward based on the results.The results indicate that it is feasible to forecast the financial distress. The indexes especially the growth of net profits, the yield on total assets and net assets play a key role. Therefore, we should pay much more attention to the profit ability. Once we find anything abnormal,we should take cctions immediately.