An Overall Financial Quality Evaluation Of The Listed Real Estate Companies In China

Since the implementation of reform and open,and the reform of land and real estate systems,the real estate market achieved unparalleled development being freed from the restraints of traditional economy,which has become an essential drive for the fast economic development in china.Currently because of the unbalanced development of the real estate demand and supply markets,the housing prices in first and second-tier cities keep rising,while the markets in the third and fourth-tier cities are under heavy pressures of selling the built housing properties.With the importance and specificity of the real estate industry,it's necessary to analyze and evaluate the industry's financial quality with emphases.On one hand,it will provide real estate companies with a new perspective for evaluating their business operation status.On the other hand,it can provide reference information to the investors helping their investment decision-making.Up to now,the researches about the financial quality of listed companies have been relatively widely developed,but there is still no agreed definition of “financial quality”.The evaluation methodologies of financial quality have difference too,which can be mainly divided in two categories:case analysis and empirical analysis.Besides,the researches about the real estate industry still more focus on sales performances and base their evaluation of development of real estate companies in different areas in macro data.Thus,this essay intends to start from micro data and develop comprehensive evaluation of the financial quality of real estate industry with multiple finance indexes of the listed companies.To achieve the goal,this essay chooses the listed companies as the research object,takes into account the demands of various stake-holders,and re-defines “financial quality”.On the basis of the stake-holder model,16 representative indexes are picked for the building of a factor analysis model.390 samples are studied through empirical analysis based on the factor analysis model:6 major factors are selected which are profitability factor,operating capacity factor,cashability factor,development factor,debt paying factor and cash getting ability,and the financial quality of listed real estate companies in the years of 2011-2015 are evaluated based on the scores of the 6 major factors as well as the overall score.The results indicate that the overall score of the financial quality of listed real estate companies in the past five years have been decreasing,with the scores of the 6 major factors being not ideal either.The major cause are the surging costs of lands and labor,relative heavy taxes,and the increasing disparity between the housing prices and land prices.Some suggestions are included in the essay based on the results,and some limitations of the research are clarified too.