Study On Construction Of Financial Risk Control System Of Nongshi

Nowadays, in the context of global economy, and with the further development of market economic system reform in China, the business environment of companies is changing dramatically. And the progress of companies to participate in international competition is rapidly after China joined the WTO. This kind of condition directly results in more complicated risks with various types that companies should deal with in their financial activities. Furthermore, the risks are no longer limited to the processes of traditional financial activities but in all kinds of events including investment activity, business activities and income distribution. Therefore, the comprehensive and systematic analysis, management and monitoring to companies’ financial risks can not only promote the healthy and stable development of companies, but also improve their intrinsic value, so that they can get more competitive edges in the complicated and changeable business environment.Based on the case study of Nongshi Company, this paper analyzes a series of financial risks the company has to deal with in business process, presents relevant controlling methods of financial risks and establishes a risk control system. Firstly, this paper makes an analysis of Nongshi general situation and financial condition in detail. The general situation is including Nongshi basic information, changes of ownership structure, organizational structure, manpower resource, main business, purchase and sales, and the present information management system, etc.; and the analysis of financial conditions is including the structure of assets and liabilities, the growth of operating income and net profit, the index of company’s operational capability, debt repayment capability and profitability. Secondly, after concluding the situations showed above, this paper summarizes the main financial risk that Nongshi has to deal with, and the four main risks are including inventory financial risk, accounts receivable financial risk, expense financial risk and investment income financial risk. Then this paper further analyzes the reasons of each of the risks. Finally, focusing on the reasons of Nongshi financial risks, this paper presents the construction plan of risk control system which is suitable for company’s state of development at the present stage, which is including:improving the company’s governance, establishing the inventory financial risk control system, receivables financial risk control system, expense budget financial risk control system and investment income financial risk control system.