Construction And Examination Of Financial Early-warning System Based On Free Cash Flow

With the quickening of global economic integration paces,enterprises of our country,while meeting opportunity for development,will face fiercer market competition, too. Where there is competition,there is risk. As various kinds of risks that enterprises face gather to a certain extent,if the enterprises can not take the measure in time, they will fall into the financial crisis. It is a course worsened progressively that enterprises get into a difficult position. This usually could be found out from the financial affairs. In right time, accurate carrying on early-warning analysis to enterprises'financial affairs is the objective requirement for the market competition system. Financial early-warning system can reach the other shore to play a role in escorting for enterprises'victory. Foreign academic circles on the financial early-warning system has done a lot of research, mainly focusing on how to conduct the financial early-warning method of analysis and early warning models and indicators research. The domestic study on financial early-warning, No matter are all a weakness theoretically or on practice. Domestic financial early warning systems research need to be developed both in theory and practice.FCF has been made out 20 years ago. But the studies of FCF have mostly been limited in the field of enterprise value assessment, financial performance evaluation and dividend distribution decision-making. Domestic and foreign scholars seldom use FCF in financial early-warning model theoretically or on practice. On the basis of analysis of related research at home and abroad, FCF have been introduced in financial early-warning model in this paper. The aim of this paper is to build a more effective financial early-warning model.There are six parts in this paper: The first part is the introduction, which introduces the research background and the significance of this paper, as well as research purposes and methods of this paper. The second part is the study of the status quo at home and abroad, respectively, reviewed the financial early-warning and FCF research. The third part is related to the theory of financial early warning, analyze the reasons of the financial risk and financial crisis, as well as introduce the basic theory of the financial early-warning. The fourth part is the theory related to FCF. This section defines the concept of the FCF, introduces several ways of FCF's calculation in detail, analyzes FCF's advantage in financial early-warning and presents the calculation method used in this paper. Part V of the financial early-warning model is based on the FCF empirical analysis. This paper selected in 2006 and 2009 prior to the listing of 15 companies by ST as research samples, according to asset size is similar to the same principles the industry selected 15 non-ST companies As a paired study sample, through the non-parametric tests and linear correlation analysis of the 30 companies of the 16 indicators have been tested to exclude the non-complying 10 indicators, eventually selected six indicators incorporated into the logistic regression model to arrive at Based on FCF to determine the accuracy of higher financial early-warning model and the model was tested to determine effects. Part VI is the conclusion. According to theoretical description and empirical analysis of the former parts, the financial early-warning model can be used to make an accurate prediction for the enterprises in financial crisis.