Analysis of Enterprise Financial Risk and the Countermeasures
【Abstract】 financial risk would have great impact on enterprise production and management. Production of corporate financial risk, both the reasons outside the enterprise, but also have their own reasons. To avoid and defuse financial risks mainly from the financial risk to establish a correct concept, the application of appropriate technical means, establish a scientific financial projections and risk control mechanisms and training high-quality financial management personnel of several aspects.
At present, China has a considerable number of enterprises, especially small and medium enterprises, the pure pursuit of sales and market share, ignoring the central position of financial management, management, rigid thinking backward, so that limited production and operation of enterprise management pattern based management among corporate finance The role of management and risk control is not brought into full play, the enterprise's financial risk to occur.
First, the meaning of financial risk and performance of the
Financial risk to the broad and narrow sense. In general, the enterprise's financial risk refers to the financing of the decision-making risks. Fund-raising channels of
different options, the amount of funding levels will inevitably cause changes in corporate capital structure, resulting in financial results uncertainty. Here, usually refers to debt financing, so the financial risks can be narrowly defined as the business
use of financial leverage due to debt caused by the uncertainty of financial results. Broader financial risk is the financial activities of enterprises in the process, due to various factors that are difficult to predict or control the impact of the financial
situation of uncertainty, so that enterprises have suffered losses.
Financial risk mainly for the financing of risk, investment risk, capital recovery risk, the risk of income distribution, cash flow risk, associated financial risk, foreign
exchange risk and operational risk capital, and other forms. Since China's accession to WTO, corporate financial management has changed the work environment, financial risk also will be some new changes. Specifically the following aspects:
(A) financing, investment risk increases
Join the WTO, further increase competition in the financial sector, the state supervision of financial institutions further specification. China's financial enterprises must strengthen their own management, business only with a good reputation,
profitability and prospects for development in order to obtain funds and financial institutions to implement the flexibility would also reduce the debt maturity, while the rigid implementation of the system will increase, thus increasing the financing of the
risk of large enterprises. In addition, many domestic products, the rate of decline in return on investment, payback period of investment growth in capital investment increased risk.
(B) Foreign exchange risk and further increase the
China's export enterprises enjoy more of the country's MFN status also assume a more complex disadvantages. In the course of cross-border operations will inevitably
involve more currencies, but also a large number of foreign exchange settlement
business, and thus will increase the foreign exchange risk and conversion risk; the same time, more foreign financial institutions are entering China's enterprises have More fund-raising methods and channels, which would undoubtedly strengthen the business
ties with the international capital markets will further increase the impact of foreign exchange risk on the business.
(C) increased risk of the operation and management of capital
Domestic enterprises, especially in some sectors may have the advantage of
enterprises, foreign firms will compete on the market at home and abroad come face to face in order to obtain a larger market share, and the imposition of external expansion, the best way is to adopt a merger, acquisition, restructuring approach. Many domestic
enterprises have production costs are relatively high, and therefore certain period of time will be in a bind. Enterprises should be planning for the implementation of mergers and acquisitions, but also engaged in mergers and acquisitions, thus
significantly increased the risk of capital operation.
Second, Chinese enterprises Financial Risk Analysis
Financial risk exists in the enterprise financial management of all aspects of the different financial risks arising from the specific reasons vary, both reasons outside the enterprise, but also on their own reasons. Overall, the following main reasons:
(A) the enterprise fund structure is irrational, excessively high proportion of debt financing
In China, the capital structure mainly refers to the enterprises to sources of funds in the equity capital and the ratio between debt financing. Due to funding decision-
making errors and other reasons, China's enterprises widespread irrational capital
structure, specifically the performance of funds in the debt ratio of total capital is too high. Many corporate balance rate of over 30%. The capital structure of the corporate financial burden caused by an irrational, a serious shortage of solvency, the resulting
(B) the lack of fixed asset investment decision-making more scientific, leading to
Investment decision-making mistakes is to produce an important cause of financial risk. In the fixed-asset investment decision-making process, because business feasibility
of investment projects, a lack of careful analysis and study of the system, coupled with economic information for decision-making based on incomplete, untrue, as well as the
reasons for low capacity of policy makers, leading to frequent mistakes in investment decision-making . Poor decisions on investment projects can not obtain the expected benefits, the investment can not be recovered on schedule for enterprises enormous financial risk. To avoid the financial decision-making mistakes on the premise that
financial decision-making more scientific.
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(3) Enterprise financial management personnel lack of knowledge the objectivity of the financial risk
Financial risk is an objective reality, as long as there is a financial activity, it must exist financial risk. In the real work, many of our enterprise financial management personnel lack of risk awareness, that as long as proper management and use of funds,
they will avoid the financial risk, risk awareness of the weak is the financial risk arising from important reasons.
(D) financial relations within the enterprise chaos
Financial relations within the enterprise confusion is China's enterprises produced is
another important reason for financial risk, enterprises and various departments within and between enterprises and between enterprises superiors, in the fund management and use of the distribution of benefits in areas such as unclear
responsibilities, poor management of the phenomenon, resulting in inefficient use of funds, a serious drain on resources, capital security, integrity can not be guaranteed.
(E) ratio of major corporate credit, accounts receivable lack of control
Since China's market has become a buyer's market, enterprises widespread phenomenon of product unmarketable. Some enterprises in order to increase sales, expand market share, extensive use of products sold on credit, leading to a substantial
increase in corporate accounts receivable. At the same time, because enterprises in the credit process, understanding the customer's credit rating is not enough, blind credit, resulting in accounts receivable out of control, a considerable proportion of the long-
term accounts receivable can not be recovered until it became bad. Free possession of the debtor's assets have long been seriously affected the liquidity of assets and security, the resulting financial risk.
Third, corporate measures to avoid financial risks
(A) establish a correct concept of financial risk
The role of corporate financial risk in the enterprise, usually presents Enterprise Asset liquidity is reduced, operating insufficient funds, asset-liability ratio is too high,
the debt burden and the fall in profitability, these problems are related to business directly related to the management of financial accounting. Enterprises in the daily activities should be vigilant in peace, establish a risk management ideas, and strengthen
risk awareness. Specifically, should strengthen the dynamic analysis, a careful analysis of the financial management of the macro environment changes, so that enterprises in the production and operation and financial activities to maintain a flexible capacity to
adapt. Increase the risk of values, and efficient financial management of institutions set up, configuration, high-quality financial management, sound financial management
rules and regulations, strengthen the financial management of all the work to
rationalize the financial relationship within the enterprise.
(B) the application of appropriate technical methods
Techniques to avoid financial risks, many ways, mainly including the following: (1) dispersion method, namely through the joint venture between enterprises, a variety of
operating and external investment in a diversified way of spread financial risk. For the higher risk investments, corporate joint ventures with other companies in order to achieve revenue sharing, risk sharing, thereby diversify investment risks, to avoid the corporate sole bear the investment risk arising from financial risk. (2) to avoid the law, that corporate financial management in the choice program, should be combined with evaluation of various options possible financial risks, guarantee the achievement of objectives of financial management under the premise, select the less risky options to achieve the purpose of avoiding the financial risk . (3) the transfer of the law, that means companies will be through some sort of part or all of the financial risk transfer to other people bear the approach. There are many ways to transfer risk, companies should be based on different risk of transfer of risk in different ways. (4) Reduce the law, that businesses face the objective of financial risks, and strive to take measures to reduce financial risk. Thus, each firm in financial management work, must pay attention to financial risk prevention work in order to effectively prevent and defuse financial risks.
(C) the establishment of a scientific financial projections and risk monitoring mechanism
Accurate financial forecasts, allows enterprises to know in advance their own financial needs, pre-arranged financing plan, the estimated amount of money may be
raised, in understanding the level of funding to meet the investment, based on the arrangements for the operation and investment in production, so that investment and financing linked detached avoid both a result of cash flow problems. Forecast also
includes a variety of possible scenarios for the future understanding and thinking, can improve the business by projecting the uncertainty of future events reflect the ability, thereby reducing the losses caused by adverse events occurred. At the same time setting
up a risk control mechanism, so that enterprises have the risk of automatic warning function, the form of development of the situation, condition monitoring, information feedback, in a timely manner may be occurring or has occurred is inconsistent with the
expected changes in reflection and study corresponding countermeasures and controls , the event brings uncertainty to minimize the risks of an enterprise.
(D) training high-quality financial management personnel
With the growing internationalization of China's market economy, corporate
finance will be faced with a variety of financial risks that may arise. This will require financial staff should have a high professional quality, not only be able to apply theoretical approaches to financial risk analysis, but also be able to specific
environments, and methods to meet the terms of and some reasonable assumptions and estimates, and on this basis, to accurately identify financial risks, to discover and
estimate the potential risks. Therefore, in cultivating high-quality talent is to avoid the
risk of an important means of corporate finance.
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