Financial Risk Early Warning And Prevention Of Construction Enterprises

The construction industry is a pillar industry of national economy, and plays an important role in the development of China’s economy and improving people’s living standard. Since the1978reform and opening up, the scale of the construction market continues to expand, domestic construction output increased by20times, the output of construction industry accounted for a proportion of GDP from3.8%to7.0%, so it would be an important force of stimulating national economic rapid growth. In2008, in orde r to address the financial crisis, one of the measures was to increase efforts to carry out the infrastructure in our countries, that promoted the prosperity and development of the construction market largely, construction GDP and profits grossmore appeared to substantial growth in2009, which greatly gave impetus to the economic and social development and promoted the improvement of the social employment rate. In the last two years, the momentum of the construction industry development is keeping on increasing, the output and total profit of construction industry in the whole society are still an upward trend. Although construction industry is a huge development, there is also a certain amount of financial risk because of the macro and micro factors,if these risks are not timely processing,it will evolve into a financial crisis, thereby affecting the survival and development of construction enterprise. Therefore, the financial risk early warning and prevention of construction enterprises which become a key issue in the development of construction enterprises.This paper studies financial risk early warning and prevention of the construction enterprises, which has important theoretical and practical significance to the enterprise risk prediction and prevention. First, this paper introduces the development of construction industry and the characteristics of the construction enterprises in China based on the theory of financial risk early warning. Second, it analyses specifically the performance and cause of financial risk of the construction enterprises from the country’s macro-control, political, environmental, contract, cost, safety, accounts receivable, accounts payable and corporate finance. Again, it selects financial indicators in terms of profitability, operational, capacity, solvency, capacity development, cash flow and management for industry characteristics and the facing risks of construction enterprises, builds financial early-warning model of the construction enterprises using the improved efficacy coefficient method.Then, it carrys out empirical research by selecting the24construction enterprises and analyses the results. Finally, it puts forward the preventive measures of the financial risk of construction enterprises from its own risk control system, bidding projects and services sub-contractor selection, security, contract, cost, accounts receivable, accounts payable and corporate finance on the basis of analysing performance and causes of financial risk and financial risk early warning empirical research.