An Empirical Study On Financial Distress Prediction Of Real Estate Listed Companies

In recent years, with China’s capital market continues to expand and deepen, the listed companies in the market are facing intense competition resulting in the survival of the fittest. And the related policies have made a clear and precise definition and planning about the delisting of listed companies and the bankruptcy mechanism. Therefore, financial management and early warning of the listed companies have been a more and more widespread concern. What’s more, the financial conditions of the listed companies tend to reflect the efficiency of the operation of the companies, pro-ducing positive or passive impact on all levels of the companies. If the financial con-ditions of the listed companies have presented a persistent non-reversal deterioration, then the listed companies are defined in financial distress. Once a company is in fi-nancial distress, it will cause the waste of resources of the whole community. There-fore, since China’s financial system and the social credit system is far from perfect, the research about financial Distress is particularly necessary and has been practical significance.After ten years of market-oriented development of China’s real estate industry, there has been a large-scale real estate listed companies. The real estate industry, which itself is the focus of media attention, has such characteristics as long life cycle, high investment, high risk. Especially in recent years, with the macro-control of the real estate industry, the listed companies in the industry imply a corresponding financial risk. The early warning on these financial risks will be related to the healthy and stable development of the industry and the national economy.This article reviews the research on Financial Distress home and abroad, through rational analysis of the characteristics of the real estate industry and to tap the sources of risk. Finally, the evaluation index system about the early warning of financial risk has been built, consistent with the characteristics of the industry by selecting a listed real estate companies in China as a sample. What’s more, the principal component analysis, wilcoxon nonparametric tests and correlation tests have been used to pre-process the sample data. Taking the dynamic principle into account, we have adopted Cox model to fit the data. So you can prevent a phenomenon that a single pe-riod model can not reflect the trends of financial position of the company. After a reasonable analysis, these six indicators of net profit margin, Asset-liability ratio,cur- rent ratio, interest earned ratio, the growth rate of total assets, ROA, sales margin can make a better early warning about China’s listed real estate company in financial dis-tress. Then we make an appropriate reasonable explanation about the economic sense of these indicators, and put policy recommendations.