BP neural network-based early warning model for financial risk of internet financial companies

Figures & data

Figure 1. Schematic diagram of the structure of BP neural network.

Table 1. Indicator system

First Dimension	Specific Indicators	Calculation Formula	Symbol
Solvency	Current Ratio	Current Assets/Current Liabilities	$x_1$
	Quick Ratio	Liquid Assets/Current Liabilities	$x_2$
	Assets and Liabilities	Total Liabilities/Total Assets	$x_3$
Profitability	Net Interest Rate on Total Assets	Net Profit/Total Average Assets	$x_4$
	Return on Equity (ROE)	Net Profit/Average Net Assets	$x_5$
	Earnings per Share (EPS)	Net Profit/Weighted Average Number of Ordinary Shares Outstanding in the Current Period	$x_6$
	Sales Margin	Net Profit/Sales Revenue	$x_7$
Operational Capability	Total Asset Turnover	Net Operating Income/Total Average Assets	$x_8$
	Accounts Receivable Turnover	Net Operating Income/Average Accounts Receivable Balance	$x_9$
	Current Asset Turnover	Net Operating Income/Total Average Current Assets	$x_{10}$
Growth Ability	Year-on-Year Growth Rate of Total Assets	(Total Assets at the End of the Period - Total Assets at the Beginning of the Period)/Total Assets at the Beginning of the Period	$x_{11}$
	Year-on-Year Growth Rate of Operating Income	(Operating Income of the Current Period - Operating Income of the Previous Period)/Operating Income of the Previous Period	$x_{12}$
Cash Capacity	Cash Flow Ratio	Net Operating Cash Flow/Current Liabilities	$x_{13}$
	Net Cash Rate of Sales	Net Operating Cash Flow/Operating Income	$x_{14}$
Value Creation Capability	Return on Invested Capital	Operating Profit Before Interest and Taxes/Invested Capital	$x_{15}$
Creativity	R&D Investment Ratio	R&D Investment as a Percentage of Operating Income	$x_{16}$
Shareholding Structure	Shareholding Ratio of the Largest Shareholder	Number of Shares Held by the Largest Shareholder/Total Number of Shares	$x_{17}$

Table 2. List of financial indicators of cluster centers

Indicators	1	2	3	4
Current Ratio	−0.0461	1.7249	−0.3307	−0.2734
Quick Ratio	−0.1318	1.7517	−0.2344	−0.2777
Assets and Liabilities	−0.4213	−1.0965	−0.0595	0.1744
Net Interest Rate on Total Assets	0.6966	0.7318	0.6217	−0.1173
Return on Equity (ROE)	0.4678	0.3448	0.6004	−0.0556
Earnings per Share (EPS)	0.2362	0.5179	−0.0177	−0.0824
Sales Margin	27.6451	0.2302	0.1532	−0.0603
Total Asset Turnover	−0.7596	−0.2401	−0.1767	0.0389
Accounts Receivable Turnover	−0.0841	−0.0493	0.1012	0.0078
Current Asset Turnover	−0.9427	−0.4156	−0.2253	0.0670
Year-on-year Growth Rate of Total Assets	−0.0222	0.5357	−0.1757	−0.0848
Year-on-year Growth Rate of Operating Income	−1.0762	0.1393	−0.3811	−0.0209
Cash Flow Ratio	1.0739	1.3994	0.2447	−0.2232
Net Present Rate of Sales	24.8954	0.1237	0.1319	−0.0410
Return on Invested Capital	−0.0119	−0.0161	36.8357	−0.0289
R&D Investment Ratio	−0.6663	1.1903	0.1819	−0.1885
Shareholding Ratio of the Largest Shareholder	−0.5631	0.2146	0.8792	−0.0343

Table 3. Rotation component matrix

	1	2	3	4	5	6	7
Current Ratio	0.932	0.016	−0.020	−0.016	0.085	−0.047	0.012
Quick Ratio	0.938	0.009	−0.016	−0.007	0.088	−0.050	0.014
Assets and Liabilities	−0.640	−0.287	0.127	−0.005	−0.023	−0.149	0.036
Net Interest Rate on Total Assets	0.217	0.885	0.014	0.107	0.054	0.023	0.000
Return on Equity (ROE)	0.015	0.902	0.024	0.072	0.061	−0.027	0.009
Earnings per Share (EPS)	0.066	0.879	0.069	0.052	0.063	−0.063	−0.004
Sales Margin	0.048	0.259	−0.069	0.837	0.019	0.031	−0.009
Total Asset Turnover	−0.067	0.047	0.956	−0.011	0.028	−0.016	−0.011
Accounts Receivable Turnover	−0.007	0.056	0.081	−0.016	−0.023	0.895	0.074
Current Asset Turnover	−0.139	0.047	0.950	−0.001	0.014	−0.008	−0.013
Year-on-year Growth Rate of Total Assets	0.141	0.095	−0.005	0.008	0.851	−0.040	0.007
Year-on-year Growth Rate of Operating Income	−0.073	0.037	0.037	0.004	0.861	0.059	−0.007
Cash Flow Ratio	0.549	0.240	0.100	0.193	−0.045	−0.057	0.049
Net Present Rate of Sales	0.050	−0.039	0.046	0.911	−0.003	−0.036	0.012
Return on Invested Capital	−0.003	0.008	−0.020	0.005	0.003	0.004	0.984
R&D Investment Ratio	0.583	−0.069	−0.177	0.010	−0.048	0.026	−0.034
Shareholding Ratio of the Largest Shareholder	−0.019	0.318	0.251	−0.013	−0.083	−0.450	0.155

Figure 2. Mean square error change diagram.

Figure 3. Goodness of fit plot.

Figure 4. Error histogram.

Table 4. Confusion matrix of prediction results of BP neural network

	Actual Output
Expected Output	0	1
0	27	0
1	0	177

Data availability statement

The data that support the findings of this study are available in Shanghai Stock Exchange at http://www.sse.com.cn/, and in Shenzhen Stock Exchange at http://www.szse.cn/index/index.html