The Study Of LGGF Company Financial Risk Early Warning

Steel industry,a core industry in China,which Chinese economic development and social construction have close connection with it,provides many job opportunities for China and alleviates part of employment pressure in China.The development of steel enterprises,actually,is fund operation between enterprise and society.As fund belongs to corporation finance within enterprise,there is crisis in the process of fund operation,whose appearance inevitably gives rise to abnormal corporate operation,thus it boils down to corporation financial risk.Corporation financial risk attracts much attention from manager and financial staff,and there are increasing researches on corporate financial risk and financial early-warning among experts and scholars.LGGFcompany,a largest integrated small and medium steel and iron company in Guangxi province,however,frequently appears business lost in recent years.Regarding LGGF as an analysis object,this thesis mainly applies synthetic efficacy coefficient method to judge and analyze the LGGF financial risk.This article,first of all,gives an overview introduction to LGGF and analyzes current operation status.By taking the annual reports in 2011 and 2014 as basic data and adopting the financial ratios analytical method came from financial statements analytical method,it analyzes four years of debt paying ability,operating capacity as well as profitability in LGGF,and finds out that LGGF is in a decline stage of corporate development cycle which although its production is large,deficit happens from time to time and capital debt ratio is too high.In addition,steel industry is experiencing most difficult time in which surplus productivity and changing national policies result in high financing cost and difficult financing.Therefore,all kinds of unfavorable factors make LGGF is in the special period of “three low and one high”.Owing to the financial risk of LGGF analyzed by above statements,in order to test this financial risk degree,the paper utilizes synthetic efficacy coefficient method and,according to the characteristics of LGGF in decline stage,selects fourteen financial indexes,including total assets net profit margin,cost and expense profit ratio,net assets return ratio,net profit margin,growth rate of main business income,growth rate of net profit,growth rate of total assets,receivable turnover rate,inventory turnover rate,total assets turnover rate,interest cover ratio,current rate,quick ratio as well as assets and liabilities ratio,from four aspects such as debt paying ability,profitability,capital operation ability and growth ability,and added with four non-financial indexes,LGGF financial risk early-warning index system was established by these eighteen indexes.This article refers to the index weight,“implementing regulations on the performance evaluation of central SOEs”,issued by State Council,defines the index weight of LGGF financial risk through related calculations,reconfigures comprehensive synthetic efficacy coefficient model with relevant index weight,puts LGGF financial data in 2014 into constructed synthetic efficacy coefficient model so as to figure out LGGF financial risk score and judge LGGF financial situation combined with early-warning area.According to the actuality of LGGF,this paper builds appropriate efficacy coefficient model to prevent possible financial risks.Use efficacy coefficient of LGGF company's annual report in 2014 are analyzed,also the calculation results.LGGF company operators,creditors and shareholders can make decisions from this article has certain reference.