Listed Companies' Financial Crisis Early-warning Based On Cash Flows

Lots of statistics in the world have proved that many enterprises ran into financial crisis gradually. Therefore, the occurring of enterprises' financial crisis can be forecasted. With the development of the securities market, the financial predicting of the listed companies is getting more and more important to people who benefits from listed companies. So the financial predicting of listed companies has become an urgent research subject.Based on the mature experiences domestic and abroad, the paper is emphasis on analysis and design of financial prediction system, designed a predicting indexes system that not only put stress on cash flow indexes but also involve traditional asset and profit indexes. The listed companies of our securities market, which are special treated firstly in 2006, are defined as enterprises in financial distress. Then a hundred listed companies (50 ST companies and 50 Not ST companies) are selected as samples of research. Sixty percent of these companies divide as estimative sample randomly, and forty percent of them divide as testing sample. According to the designed system, based on the financial data in 2003 of enterprises in crisis, the paper establishes a Principle Components Prediction Model by adopting principle components analysis, then verify the model with the testing sample. The outcome indicates that 82.5 percent of the sample can be predicted effectively. Compared with other existing research, this outcome raises accuracy of predicting. Thus the indexes system is validly.