Article
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Research on Financial Risk Management Early Warning Model for Chinese Enterprises
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Version 1
: Received: 7 May 2024 / Approved: 8 May 2024 / Online: 8 May 2024 (14:49:51 CEST)
How to cite: Wei, H.; Wang, X. Research on Financial Risk Management Early Warning Model for Chinese Enterprises. Preprints 2024, 2024050503. https://doi.org/10.20944/preprints202405.0503.v1 Wei, H.; Wang, X. Research on Financial Risk Management Early Warning Model for Chinese Enterprises. Preprints 2024, 2024050503. https://doi.org/10.20944/preprints202405.0503.v1
Abstract
This paper utilizes the 2020 financial data of A-share listed companies, both ST and non-ST, as the data sample. The model is constructed employing the Factor-Logistic fusion algorithm. Eight key indicator factors were selected from the frameworks of profitability, solvency, operating capacity, development potential, shareholder retained earnings, cash flow and asset growth. An independent indicator system was subsequently established to address the issue of collinearity among risk indicators. The results of model are presented in the form of probabilities, enhancing the interpretability of model. The weights of the features indicate the influence of different features on the final outcome. The model achieves a prediction accuracy of over 89%, with an AUC score exceeding 95%. Finally, by applying the principles of interval estimation theory in statistical hypothesis testing, the risk levels are categorized as A-level representing significant risk, B-level representing moderate risk, C-level representing minor risk and D-level representing no risk. This paper aims to provide a comprehensive definition of a universal financial risk management warning model for enterprises, applicable to all enterprises in China.
Keywords
financial risk; financial risk warning analysis; financial warning level
Subject
Business, Economics and Management, Finance
Copyright: This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
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