Research On Financial Risk Evaluation Of Real Estate Enterprises Based On Entropy Weight-TOPSIS Model

The real estate industry has become one of the main forces of China’s economic development.However,housing price and the emergence of a huge price bubble,huge financial risks has arisen to real estate development enterprises,commercial banks and other investment institutions and the majority of buyers.In order to stabilize the market and reduce investment risks,since 2016.,many measures has been taken to curb the rise of housing prices,such as increasing the construction of affordable housing,control the flow of bank credit into the real estate industry,reduce or even suppress the expectation of rising housing prices.Meanwhile,to different housing prices and market responses,local governments have gradually formulated more targeted control policies and measures.With the implementation of various regulation policies,real estate development enterprises are facing increasing financial risks.Countless real estate companies are in the state of capital chain fracture.In 2020,470 real estate companies applied for bankruptcy.Therefore,it has become vital to effectively identify,analyze and control the financial risks in real estate enterprises.Based the research results of existing literature,this paper selects 167 real estate enterprises as research samples,which are listed in Shanghai,Shenzhen and Hong Kong,and evaluate the financial risk of selected sample enterprises in the entropy-weight TOPSIS model,with their financial statement data audited by accounting firms from 2016 to 2020.First of all,choose the evaluation index according to the characteristics of the sample enterprise;at the same time,make necessary correction on primary data and build the evaluation index system which can tell the profit ability,growth ability,cash flow ability,and the financial risk;and process the index data.Secondly,calculate the objective weight coefficient of each financial risk evaluation index using entropy weight method,and analyze the overall financial risk of each sample enterprise,using TOPSIS method.Finally,get the size of each enterprise’s holistic financial risk according to the horizontal comparison and time series analysis of the above results,and then put forward strategy to effectively control the financial risk and ensure the steady development of enterprises.The conclusions can be drawn :(1)Financial risk is directly related to the enterprise scale.Most of the enterprises with high asset scale and net profit have moderate or small financial risk,while most of the enterprises with small asset scale and net profit have relatively big financial risk.(2)Through the calculation of the objective weight of each indicator,it is found that the higher the sample enterprise’s net profit,the turnover rate of total assets and the growth rate of total assets,the lower the relative financial risk.(3)According to the changes in the number of the sample enterprises’ financial risk grades from 2016 to 2020,it can be seen that their financial risk has increased year by year from 2016 to 2018 and declined slowly from 2018 to 2020,which reflects have fully realized the industry risks with the influence of national regulation policy,and have gradually adjusting the comprehensive financial risks.The design can help for real estate enterprises to evaluate and prevent financial risks.