Research On Financial Risk Of Ningbo Shenglong Co., Ltd.

Under the current market economy,competition in various industries can be described as extremely fierce.Business failures and bankruptcies occur at any time.A large part of this is caused by the deterioration of the company's financial situation or even the outage of funds,and the deterioration of the financial situation is due to the company's neglect of financial risks.Therefore,in the course of operation,enterprises should pay special attention to the work related to financial risks.And the mining and prevention of financial risks can help companies achieve the goal of maximizing profits and long-term sustainable development.After continuous innovation and development,the global automotive industry has now become one of the largest industries in the world.China's automobile industry has also developed rapidly with the acceleration of reform and opening up.Driven by China's automobile market,the parts industry in the middle of the automobile industry chain has also ushered in good opportunities in recent years.But while a good environment brings better development opportunities,it also produces more intense competition.In 2018,the entire automotive industry experienced a cold on a global scale,and the global automotive market ended its seventh consecutive year of rise.Because the production and sales of the auto parts industry are greatly affected by the downstream vehicle industry.China's auto parts companies have also been hit on a large scale.Ningbo Shenglong Co.,Ltd.is also affected.Many of the company's financial indicators have deteriorated for two consecutive years,showing a decline in the competition of the domestic parts industry.If this continues to develop,there may be a financial crisis.In this case,the identification and prevention of financial risks are particularly important.This article takes Shenglong's financial report as the source of data and information,and takes financial management-related knowledge as its theoretical basis.First use the Altman Z index,DuPont analysis system and other tools to conduct a comprehensive analysis of the company's financial situation.After taking the basic content of the company's financial activities as the basis for classification,from the four perspectives of financing activities,investment activities,fund recovery activities and dividend distribution activities,respectively,compare and analyze a variety of financial indicators to explore the financial existing in the actual operation of Shenglong risk.It was found that Shenglong shares have weak solvency during the operation of the enterprise;the investment risks of production projects are high,and the risks of equity investment are too concentrated;financial risks such as weakened capital recovery capacity and unreasonable dividend distribution.In order to prevent the financial risk,this article further analyzes the details and financial data disclosed by the company to find out the causes of the company's existing financial risks.Finally,based on the general financial risk response method,it proposes targeted risk prevention measures for the company's four aspects of financial risk.Financing risk prevention and control measures: reasonable mix of long-term and short-term debt ratios;improve asset liquidity;moderate debt;strengthen risk management in the financing process.Investment risk prevention measures: strengthen management;increase risk awareness of management decision makers;formulate a diversified investment portfolio.Prevention measures for capital recovery risks: improving product competitiveness;strengthening inventory,accounts receivable and corporate credit management;appropriate use of cash discounts,promotional methods and credit sales credit insurance.Prevention measures for income distribution risks: establish an independent director system and strengthen the functions of the board of supervisors.With a view to providing reference for Shenglong's financial management.Although the analysis in this article is all for Shenglong,in fact,many auto parts companies also have the same problems,and the reasons are very similar.I hope this article will also have a certain reference value for the prevention and control of financial risks of other auto parts companies.