Research On Financial Crisis Early Warning Of Real-estate Enterprises

Real-estate is an industry of intensive capital with features that initial high investments,long circle of funds,bad liquidity. Real-estate enterprises have high liabilities and are sensitive linked with market risks, which determines they are suffering high financial risks. Especially lots of real-estate enterprises ran in bankruptcy when the globe financial crisis occurred, how to prevent the bankruptcy of real-estate enterprises is a task that badly needs completed.The object of existing research on early financial warning centers on all enterprises, few concentrate on one industry. This article reviews the former scholars'research on early financial warning of enterprises. Based on achievements of former scholars, referring to features of real-estate enterprises, using publicly listed real-estate enterprises as sample, this article firstly employs nonparametric tests to choose indexes that is significantly different between financial- crisis enterprises and non-financial-crisis enterprises from given indexes, and then employs principal component analysis and logistic function regression analysis to set a real-estate enterprise financial crisis early warning model. Principal component analysis is able to reduce major information of indexes into a few principal factors that are not correlated with each other, which is good to the integrity of information and the regression of a model; logistic function analysis have advantages such as high precision of prediction,no rigorous premises and so on, which is widely used in early financial warning in research.Empirical research proves that in aspects of debt-paying ability,operation ability,profit-making ability,growing ability,cash-gaining ability and company management ability, indexes different between enterprises in financial crisis and not are liquidity ratio,cash ratio,asset turnover ratio,fixed asset turnover ratio,liquid asset turnover ratio,account receivable turnover ratio,return on equity ratio,return on asset ratio,return on major business ratio,rate of net profit to sales,asset growing ratio,major business income growing ratio,rate of net cash flowing to liability and the stock proportion of the biggest stockholder. While indexes indifferent between those two types of enterprises are quick ratio,asset-liability ratio,inventory turnover ratio,rate of the stock proportion of the biggest stockholder to that of the second biggest stockholder, which reflect the features of real-estate enterprises. This article uses principal component analysis on the indexes that proved to be different between two types of enterprises then make a logistic model regression which indicates that operation ability,debt-paying ability,profit-making ability from major business,cash flow related indexes do have an significant effect on the prediction whether a real-estate enterprise runs into financial crisis. The precision of prediction of that model is 95.6%, which indicates that the model has value in practice and is able to make good judgments of financial states of real-estate enterprises which offer evidences for profit related people to make measures.