Based on the definition of financial distress, this paper used cash profit as a main discriminatory tool to decide the corporate financial statement and established a financial distress forecast system on the basis of cash flow. Then builds a traditional forecast system to compare the superiority of two systems by logistic regression analysis using the data of China's A share listed companies in manufacturing industry from 2005 to 2007.The result suggests that the cash flow based system can reach a better forecast effect before two years of the financial distress. |