Research of the credit capacity evaluation based on the principal factor analysis

In this paper we introduce the method of principal factor analysis to evaluate the credit capacity of 9 listed companies in China stock market. 16 evaluation indicators containing 5 aspects of companies' fundamental situation information are chosen from their financial statements. After computing and analyzing the cumulative variance contribution and load matrix of standardization of the original indicator data matrix, 4 principal factors are extracted. The final overall evaluation score can be obtained quantitatively by building the factor scoring model. In the result of the empirical analysis the score and the credit rank of the sample companies is coincided with the real situation and it provides a reasonable standard for the commercial banks to draw up the business policy for their customers.