Research On The Financial Risk Analysis And Control Of Tongda Limited Liability Company

With the ever-growing competition in the market, uncertain factors in business operationshave increased which inevitably expose enterprises to bigger financial risk. However, financialrisk is unavoidable when pursuing profit. Such being the case, positive evaluations of thefinancial risk and appropriate precautions against it are crucial to ensure a firm’s long-termstable development. Financial risk has increased since fabricated metal industry developedgradually from monopoly to marketization. Enterprises are facing dual challenge from marketcompetition and scientific management, which undoubtedly brings financial risks toenterprises in many ways.The thesis takes Tongda Ltd. as an example, lists and analyzes the possible financial risksin most enterprises based on the fundamental theory of financial risk. It identifies currentfinancial risk of Tongda Ltd. as funding risk, investment risk, operational risk and cash flowrisk through the analysis of financial data, important indicators, and the above-mentionedtheory. It also makes the factors comparison of the four indexes based on the data. Afterselecting financial indicators corresponding to risks, index weight is calculated and thedistribution vector is ensured by experts. Through analytic hierarchy process which is appliedto evaluate financial risk of Tongda Ltd, we obtained that the current enterprise financial riskis at the medium alarm. Sharp increases in accounts receivable and decrease of turnover rateare the main causes; moreover, the reducing of corporation’s net cash flow is also one of them.In the end, the thesis proposes preventive measures to strengthen its risk managementfrom the aspects of financing, investment, operations and cash flow. In this thesis, thefinancial risk of Tongda Ltd. is studied, in the hope that it can provide some references forfinancial risk management.