Study on the Financial Risk Evaluation of Listed Companies Based on Grey System Theory

With the rapid development of China´s capital market, the financial risk profile of listed company is becoming increasingly vital. By taking the financial risk profile of listed companies as a grey system, this paper presents a financial risk evaluation method and a corresponding model according to the grey system theory. The indicator system is built after the analysis of commonly used indicators in financial risk evaluation. The reference series and comparative series are then obtained by building of eigenvalue matrix and its normalization. After that, the level of financial risk evaluation is determined by calculating the degree of grey correlation of the comparative series. Financial data from 11 listed companies are used to verify the proposed method and model.