Research On Financial Risk And Precautions Of M Company

With the continuous further development of China’s market economy, China’s Small and medium-sized enterprises(SMEs) usher in a major market opportunities, while also facing a highly competitive market environment and more complex kinds of risks. These risks increase the business activities of uncertainty, which greatly limits the steady development of SMEs, which is particularly serious financial risk. Currently, SMEs in order to quickly capture the market share, improve the economic status of the company’s marketing efforts as a strategic priority, but largely ignored the seriousness of corporate financial risk management process caused by their ability to resist risks in the lower level. Found financial management in corporate loopholes, no financial risk due to their effective and evaluation, only realized the situation was serious until the crisis, resulting in many unnecessary economic losses. Therefore, the correct understanding of the importance of financial risks, the use of scientific methods to identify financial risks and to effectively prevent and control is an important subject that the managers of SMEs need to face.This paper on the theory of financial risk management as the basis, select the small and medium-sized enterprise M company as the research object, through the analysis of the company’s financial statements and various financial indicators, and the use of Z score model of the of comprehensive evaluation, understand the current financial risk status and main financial risks. On the basis of, from the M company’s financial situation of mainly from the following aspects reveal the financial risk causes: First, from the perspective of the impact of the external environment, the national policy adjustment makes the market environment becomes poor, the operating costs of the major raw material price fluctuations; the second, from the point of view of financing activities, the financing cost is high, interest bearing debt pressure and capital structure is reasonable; the third, asset management from the point of view, its do not attach importance to inventory management and material purchasing plan is not reasonable; the fourth, from the accounts receivable recovery point of view should be, the sales staff performance appraisal no and accounts receivable recovery hook, accounts receivable bad debt is serious; the fifth, from the perspective of internal financial sector, the financial sector ignored and financial risk prevention awareness is weak.In view of the M company existing in the various links of the main financial risk management loophole, it is suggested in this article that M company can take the following measures to guard against financial risks: first, moderate debt, establish a reasonable capital structure, and actively grasp preferential policies for high-tech projects; second, cash, inventory and fixed assets management, make the purchasing plan in a scientific way; the third should be accounts receivable must linked with the sales staff, formulate the reasonable collection procedures; fourth, enhance efficiency of M company financial. If M companies can take these practical measures, it may help companies out of the financial predicament, to get higher profits.