The Study On Financial Crisis Forecasting Based On Enterprise Credit Rating

With the rapid development of our economy, enterprise economicstrength constantly increased. But, when enterprises are growing bigger andbigger, they will face the threat of financial crisis at any moment. Therefore,fully revealing the enterprise potential financial risk and accurately predictingthe enterprise financial crisis possible is, for operators, of important theoreticaland practical significance.In this article, financial crisis forecasting based on enterprise credit ratingis in-depth discussed. First, in order to define the financial crisis enterprisesand choose the samples of establishing model, credit rating method is appliedto evaluate enterprise credit status, and the financial crisis enterprises andhealthy ones are found by dividing credit ratings, which is the focus of thisarticle. Second, according to the certain principles,14financial crisis warningindicators reflecting the basic operation condition are selected as the initialvariables of constructing model, and then5representative ones are extractedby Principal Component Analysis as the independent variables of constructingmodel. Third, combining the specific situation of our biological medicineindustry, using Logistic Regression Analysis constructs a financial crisis forecasting model with the capability to predict two years in advance, simplyand directly revealing financial gap between two types of enterprises.The empirical results show that the model has good prediction effect,whose prediction accuracy of estimating sample and testing sample wererespectively91.2%and84.3%. Besides, the article suggests that in order toprevent the enterprise appearing insolvency or capital chain rupture and toavoid the happening of financial crisis the listed companies of China’sbiological medicine industry should more focus on the2indicators of debtpaying ability and cash flow and even on the change of financial datum behindthem in the future.