Research On Financial Risk Analyzing And Controlling Of Huaxin Company

Abstract:In recent years, the international political and economic environment with which enterprises are confronted has become increasingly complex. Product updates quickly and competition in the industry is more intense. However, great uncertainty existed in product and technology development, difficulties in financing and big investment risks make companies face financial risks that can’t be avoided. If companies don’t apply actively and reasonable precautions to control these risks, it will be likely to affect investment and output efficiency, even into financial crisis and causing bankruptcy.Therefore, enterprises should enhance risk awareness, monitor the financial environment dynamically and understand the financial management and control mechanisms in depth to formulate appropriate measures to control financial risks effectively. The Huaxin Company always be in financial risk management blind spots. And the financial risk has affected the company’s continuing operations.Based on this, it is essential to study the financial risk of Huaxin Company. This paper, firstly,according to financial risk control theory,introduces the specific meaning, characteristics and types of financial risks, also describes both qualitative and quantitative warning methods of the financial risk.And then utilize those methods, through using financial and non-financial indicators such as gearing ratio, return on average net assets, cash flow debt ratio, inventory turnover, executives Shareholding, this article build the comprehensive evaluation index system to distinguish the financial status of Huaxin Company from multiple angles.The conclusion is that he value of Z is1.711and F is33which illustrate this company in grate financial risk. The specific reason is that, in addition to the higher accounts receivable turnover ratio, the other indicators such as asset-liability ratio, the average return on net assets, cash flow debt ratio, inventory turnover, executives shareholding ratios is not satisfied when compared with the similar better companies during same period. Finally, on the basis of Status quo the paper proposes how to control financial risks of Huaxin Company, and the valid and practical control measures is contribute to establish financial risk control system.