Study on prediction model of financial risk in Chinese listed companies — Based on the empirical data from Shanghai and Shenzhen stock market

With the development of Chinese stock market, more and more attentions have been paid to the prediction of financial risk of listed companies. So far, our studies on financial risk prediction model have achieved a lot, but the rest ill existed some faults because of the limitation of surrounding conditions, the most prominent of which was the simplification of variables selection. Theoretically, earnings per share(EPS) can reflect the profitability of firm most, but operating cash flow per share can reflect the quality of EPS most. In addition, firm´s cash numbers can be influenced by the change of market and financial environment directly, so we can decide and measure the financial risk through the comparison of cash flow during a certain period. This article expects to make progress on financial risk prediction model by taking cash flow information into account.