Research On Financial Crisis Early Warning Of Listed Manufacturing Companies

Under the "Made in China 2025" program,the manufacturing sector generated 2,441.65 billion yuan(US$3.7 trillion)in GDP in the first three quarters of 2022,accounting for 28.06%of China’s total GDP,indicating that it will be a vital driving force for China’s economic recovery.Manufacturing plays a crucial role in achieving the great renaissance of the Chinese nation.However,the development of the manufacturing sector faces unprecedented opportunities and challenges due to the changing global economic situation.To address this issue,this paper selects suitable indicators to develop a financial crisis prevention model based on the characteristics of the manufacturing sector,constructing an early warning system that can monitor the financial situation of listed enterprises in real-time and provide decision-making guidance to enterprise managers and stakeholders.The model is expected to play a critical role in the current research on early warning models for corporate financial crises.Previous research has mainly focused on listed companies in general and rarely on specific industries,using traditional financial reporting and financial indicators.However,with the continuous development and improvement of information technology and financial markets,some scholars have noted that the existing structure of information presentation in financial reporting has some shortcomings.Thus,financial statements may not fully reflect the actual financial position of the enterprise.Based on this,this article attempts to establish an early warning model that can reflect the characteristics of the manufacturing industry on the basis of financial statement reconstruction.This paper classifies financial statement items into three categories: Operating Income,Financial Income,and Discontinued Operations.Based on this classification,indicators are developed to reflect the financial level of the company from six perspectives: Profitability,Operating Strength,Growth,Solvency,Cash Flow Capacity,and Risk Level,as well as Shareholder Structure and Management Style.These indicators are combined with non-financial indicators reflecting shareholder structure and management tone to create an early warning system for financial crisis indicators.To validate the effectiveness of the model,the study selected 76 manufacturing enterprises that had received an initial risk warning for delisting from the China Securities Regulatory Commission(CSRC)due to their financial condition and 228 normal operating manufacturing enterprises that had not received special treatment between2015 and 2022.The study developed a T-3-year financial crisis warning model using factor analysis and logistic regression,comparing it with a traditional financial statement-based warning model.The results showed that the crisis prevention model based on restructured financial statements is more effective than traditional financial statements in predicting whether a company will enter a crisis in the next three years.Overall,this paper provides recommendations for investors,companies,and relevant government agencies in the areas of investment decisions,financial disclosure,and financial reporting,based on the empirical results of the study.The findings of this research contribute to the development of financial risk early warning models for listed manufacturing companies in China.