China's Listed Companies' Financial Warning Empirical Research

With the development of our economy at very fast speed, complexity and uncertainty in economic area are increasingly prominent, and the risks existing in securities business are changing dramatically. In this situation, the cases of list companies being in hot water or even going bankrupt are more and more because of the bad handling of financial risk. Therefore, it becomes a topic people concerned that how to be alert to the financial distress before it happens and how to take actions to avoid or reduce the losses which financial risks caused.Through the enterprise finance condition forecast, it will help the investor clearly recognize the truth of investment object. So, trough various the financial index that has representative establishment, it is a kind of relatively effective advance warning method that model carries out advance warning, through forecast as making judgement quickly by the financial statement of investment object, in order to adopt measure in time, prevent trouble before it happens. Just based on this thought, the paper illustrates the financial status in financial prediction model.There are four parts in the paper.The first part introduces basic theory of financial advance warning. It points out financial risk, financial difficult condition and financial advance warning and their inner connection from risk angle. It also points theoretical foundation and the function of financial advance warning.The second part points out the inspiration of foreign study to our study in this field after making a review and comparison of the present status of list companies home and abroad.The third part introduces qualitative and the quantitative research method of the financial early warning and their own respective serviceability. Meantime, it points out how to determine the sample. And basic index and specific index used in the model establishment process.