The Research On Financial Crisis Forewarning System Based On The Theroy Of Entropy

Financial crisis forewarning system can predict and analyze the corporate financialsituation and alert the potential financial crisis problems for the management through buildinga suitable effective system. Currently, the research about listed companies’ financial crisiswarning system is mainly conducted in manufacturing industry. However, few related studyhas been carried out in road transportation industry. It is self-evident that road transportationindustry plays a vital role in society recently, considering the rapid development of the wholeindustry. Therefore, there is huge theoretical and practical significance for researching theFinancial crisis forewarning system in road transportation industry.The author of this dissertation adopts the entropy theory and establishes a Financial crisisforewarning system suitable for road transportation industry, after fully considering theexclusive industry characteristics and specific financial features. The essence of entropytheory is to measure the non-possibilities. The variables and statistic weight could be assuredand utilized for building crisis warning system, with the help of information offered bysmoothly running companies or companies facing with potential financial crisis.The existing financial crisis and related reasons are analyzed, according to the currentdevelopment and characteristics of enterprises in road transportation industry. Furthermore,factors influencing the financial crisis involved in road transportation industry are identified,on the basis of solvency, finance effectiveness, assets operation and development abilities. Inthe practical analysis sector, firstly, it is assumed that four development situation, namelysolvency, finance effectiveness, assets operation and development abilities, could be evaluatedby utilizing the warning system. Secondly, Financial crisis forewarning system in roadtransportation enterprises in Guangdong province could be built up based on entropy theory. Itis inferred that whether a company has the potential financial crisis could be identified withthe help of Financial crisis forewarning system. In addition, it is feasible to build this systemamong road transportation corporations, relying on entropy theory.