Research On Financial Risk Evaluation And Control Of Muyuan’s Vertical Integrated Business Model

With the high-quality development of China’s economy,the market environment is closely related to the management of enterprises and the internal operation of the company.In this context,financial risk is one of the important factors affecting the normal operation of enterprises,and the management of enterprises should evaluate and identify financial risks in a timely manner,and control financial risks to ensure the normal operation of enterprises.Although many experts have done a lot of research on financial risks and produced valuable results,in the context of the current high-quality development of enterprises,the evaluation and control of financial risks still need innovation and development.With the development of China’s economy,China’s productivity level has improved,bringing opportunities to the pig breeding market,and at the same time,the competitiveness of the pig breeding market has become greater;At the same time,with the outbreak of pork diseases such as "African swine fever" in China,the cost of daily production and breeding of enterprises has become high;Through vertical integration based on pig breeding,pig breeding enterprises will inevitably encounter new financial risks in the vertically integrated business model,so it is of practical significance to study the financial risk evaluation and control of pig breeding enterprises under the vertically integrated business model.As a leading enterprise in the pig breeding industry,Makihara’s 2021 annual report pointed out that its operating income increased by 40.18% over the previous year,and its net profit decreased by 74.85%;This is obviously related to the rapid expansion of Makihara in recent years with a vertically integrated business model,and there are certain financial risks in the process of vertically integrated operation.This paper analyzes the advantages and disadvantages of the vertical integration of Makihara by giving an overview of the vertical integration of Makihara shares,and identifies the financial risks based on the financial indicators of Makihara to determine the importance of financial risk evaluation of Makihara shares.At the same time,the advantages and disadvantages of the financial risk evaluation system are analyzed,and the financial risk evaluation indicators are confirmed and the corresponding financial risk evaluation system is constructed on this basis.By using factor analysis to construct a financial risk evaluation system and conduct horizontal and vertical analysis of Makihara shares,the horizontal analysis is based on the 2021 financial risk evaluation indicators of 36 pig breeding enterprises in the same industry,and the longitudinal analysis is the evaluation of the financial risk indicators of2013-2021 that are obvious in the vertical integration process of Makihara shares,and the four aspects of growth,debt servicing,profitability and operational risk are studied.The study found that the comprehensive factor score of Makihara shares ranked18 th in the industry,of which except for the profit and debt repayment factors,the remaining two factor values were in the bottom 50% of the industry,and the overall situation was not ideal.Through the evaluation results and combined with specific index data,the specific causes of the financial risk of Makihara shares are analyzed in depth.After analysis,this paper believes that Makihara should establish a risk management department to enhance the overall financial risk management awareness;Expand financing channels,optimize debt repayment structure,and enhance debt repayment capacity;Expand sales channels and increase profitability;Improve the credit management system,establish inventory management mechanisms and other relevant control measures to avoid greater financial risks.