Research On Financial Risk Control Of Boyu Auto Part And Components Co.LTD

The automotive industry is the largest pillar industry in Jilin Province, as theleading enterprises supporting many auto parts enterprises is an important part of theprovince of SMEs. In recent years, the international and domestic macroeconomicsituation is complicated, the automotive industry is facing great uncertaintymanagement, auto parts enterprises in the industrial chain of low-end, year-round bythe squeeze on downstream businesses, self-management level is not high, the lack oflong-term issues such as risk control mechanism, allowing companies to face a hugefinancial risk, severely hampered the development of auto parts enterprises. Therefore,the design of a complete financial risk control process, the establishment of afinancial risk control system, effective control of financial risks province auto partscompanies, automobile parts enterprises is essential to the development of theprovince, also for other SMEs certain significance.Financial Characteristics Boyu auto parts company, manifested in a higher assetratio of current assets, primarily accounts receivable and inventory; all liabilities ascurrent liabilities, no long-term debt; higher proportion of owner’s equity, butregistration capital is small, the main source for the enterprise retained earnings. Themain financial risks faced by the Company for debt risk, investment risk andoperational risk, operational risk which is the most fundamental risks facing thecompany. The company’s current financial risk control budget mainly the lack ofscientific management, the company’s financial risk control lack of initiative, riskcontrol measures for a single control system is imperfect and other issues, the main causes of the problem into the external environmental factors and internalenvironmental factors, external environmental factors are mainly macroeconomiccomplicated financial risk control efforts to bring about the difficulty, the main factoris the lack of internal environmental quality of employees, poor risk awareness, riskcontrol mechanism is not perfect and so on.In response to these problems and cause analysis, companies should improvefinancial risk control work from the following four aspects: First, to strengthen thefinancial budget management, determine the correct budget targets, establishappropriate budget model,choose a reasonable budget approach, establish a sound andreasonable budgeting process. The second is to establish an effective financial riskearly warning system based on simplicity, sensitivity, dynamic principle, riskidentification method of combining qualitative and quantitative, to build the indexsystem of financial risk early warning system and identify indicators critical range.Third, the rich corporate financial risk control measures, a reasonable choice controlmethods. Fourth, the establishment of financial risk control system correctionmechanism, based on business conditions make adjustments to the financial riskcontrol system.The company should strengthen the financial risk control work of theimplementation of safeguards. First, establish and improve the organizationalframework that extends the range of functions of the financial sector, theestablishment of the internal audit department, the establishment of financial riskcontrol leading group. Second, establish full accountability system risk, enhance riskawareness of all staff, reasonable division of responsibilities and confirm the mainresponsibility. The third is a sound performance appraisal system of financial risk anddetermine the financial risk control and performance appraisal cycle assessment indexsystem, strengthen the application of the results of the assessment to ensure theeffective conduct of financial risk work.