This paper presents a financial affairs early warning model that is e stablished on the basis of an empirical study on financial crisis in China's lis ted companies.Using the principle components analysis approach the paper identif ies the weight of each influential factor's index. The paper also analyses the f inancial indexes of chosen samples and defines the extent of financial evaluatio n.The findings of the study overcome shortcomings arising from those data that a re influenced by subjective factors.The paper describes the intrinsic paradox ex isting in financial state of companies and concludes with an introduction of a s cientific and feasible method for forecasting financial crisis.