Constructing The Financial Risk Evaluation Indicators System Of Internet Enterprise

In 1995 April, Ma Yun who studied in the USA founded China’s first domestic business information site called "Chinese Yellow Pages", and released a batch of internet homepage. Since then network knowledge and its application in popularity began. With the spreading of Internet knowledge, China’s Internet market and Internet enterprise development have promoted each other. In July 21, 2014, China Internet Information Center released the thirty-fourth report named "The Development Status of Chinese Internet Statistics Report". The Report showed by June 6, 2014, the scale of Chinese Internet users had reached 632,000,000, of which the mobile phone Internet users took part of 527,000,000. Internet penetration rate had reached 46.9%. In August, 2014 the MIIT(Ministry of Industry and Information Technology) released “The top 100 Chinese Internet Enterprise of 2014” combined with China Internet Association. According the data, the gross income of the top 100 Chinese Internet Enterprise approached to ￥400,000,000,000. The income of listed enterprises was above ￥240,000,000. Among them, the revenues of the top five was half more than the top100 total. The first 20 enterprises accounted for 80% of the business income. This shows the high revenue of China’s Internet industry concentration degree and the obvious advantages of scale. With the broad market demand, good development prospect, huge profits and returns, the Internet enterprises are facing great opportunities for development.However, with a good development opportunity at the same time, because of the high risk, there is a certain difficulty in obtaining financing for the Internet enterprises. At the same time, compared with other enterprises, internet firms will face a higher financial risk in the process of operation, due to the features such as high growth, high investment, high-tech, new business models, and the great changes in market. Therefore, how to evaluate the financial risk of the Internet enterprise and how to take reasonable and effective measures to prevent financial risk is particularly important.Therefore, the purpose of this paper is to construct a financial risk index system and provide an effective financial risk evaluation method for Internet enterprises, which can help the enterprises timely identify the risk during the process in finance management. The main contents of this paper include: Summarize the research of enterprise financial risk evaluation in domestic and foreign. This paper analyzes from four aspects, cash flowing risk, financing risk, investment risk and business model risk, which is on the basis of previous research, the internal and external effects of the financial risk and the financial factors of Internet enterprise. Based on the analysis of influence factors of financial risk and the financial characteristics of Internet enterprise, this paper establish the Internet enterprise financial risk evaluation index system, from the enterprise’s debt paying ability, profit ability, assets operation ability, growth ability, cash ability, innovation ability, management ability and ownership concentration indicators, synthetically reflecting the Internet enterprise’s cash flow risk, financing risk, investment risk and the business model risk. On the index weight determining, this paper uses Analytic Hierarchy Process(AHP), which is more scientific, then concludes the effective weight ratio of each index and the index level in the index system. To apply for the evaluation index system of financial risk, this paper uses the case of A Internet enterprise in domestic market. According to A company’s annual report in 2013, this paper calculates the weight of each index respectively based on AHP, and then gets the specific value of A enterprise’s financial risk index using the financial risk index calculation formula. After that we can determine the situation of A enterprise’s financial management activities according to the level of financial risk. Through the application of case, we get the conclusion that the Internet enterprise financial risk evaluation index system in this paper is effective.