The Empirical Study On Financial Risk Of The Steel Industry

Financial risk research is a hot topic for a long time, many domestic and foreignscholars have conducted a lot of research, has formed a relatively complete set oftheoretical system. Iron and steel enterprises play an irreplaceable role in the nationaleconomy as a pillar industry of the national economy. In recent years, the problemexists in the domestic and international economic situation and their owndevelopments, which cause the development of China’s iron and steel enterprises hasbecome increasingly difficult. Take that passive market competition, tight liquidity,corporate profit margins shrinking, business and financial conditions have madeworrying, the effective evaluation and control of the financial risk of the iron andsteel enterprises, is even more necessary to enhance the awareness and ability to dealwith financial risk in China’s steel enterprises. So paper selects listed companies ofthe iron and steel industry as a sample, to research the causes and the evaluation ofthe financial risk, and proposed the corresponding control measuresThis paper first describes the difficulties in the development of China’s iron andsteel industry and its financial risk assessment study theoretical and practicalsignificance, in the theoretical analysis of the domestic and international research,summed up the law, to identify commonalities, combined with the reality of theindustry, to determine its research and evaluation of financial risk. Second, based ondefining the concept and characteristics of financial risk, and make further efforts tothe iron and steel enterprises management and financial analysis,, and ultimatelyselected28listed steel enterprises in the2009-2011financial data as the studysample standardized treatment drop by factor analysis dimension draw sevenprincipal components, so as to establish China’s steel enterprises in financial riskassessment model, and then compared the main factor affecting the industry, throughinductive analysis of empirical results of three years of the score ranking order andvariation of inductive analysis, can draw the debt paying ability, development ability,operation ability have a greater impact in the performance of the financial riskassessment of iron and steel enterprises debt paying ability, operation ability has a little influence for a better financial situation of the enterprise, and profitability has agreat influence for the poor financial situation of the steel enterprises The poorfinancial situation of the steel enterprise especially to attention profitabilityindicators. Finally, according to the above analysis, the iron and steel enterprises inthe current situation, financial risk control initiatives, to be able to effectively makethem powerfully to deal with the financial risk crisis.The innovation of this paper include:(1)On the basis of previous research,combined with the risk and the causes of the financial analysis of iron and steelenterprises in China, build a suitable financial risk assessment model for China’s ironand steel enterprises.(2)Past studies in selected financial indicators used to select thetotal assets turnover ratio and profit margin as indicator variables, to fully considerthe characteristics of the steel industry, the introduction of fixed assets relatedfinancial indicator variables comprehensive analysis of the study. Eventually, thefinal assessment model of the financial risk is more suitable for the industry.