Case Study On The Financial Risk Management Of Yinan Electric Power Co., Ltd.

Electric power industry is the pillar industry of national economy.Before the reform of electric power enterprises,electric power enterprises attach less importance to the profit target.However,since the 18 th National Congress of the Communist Party of China,the state has increased the reform of electric power market,and electric power enterprises gradually need to enter into the market competition to ensure the sustainable operation and business performance of enterprises.Faced with such a complex market environment,enterprises need to pay enough attention to financial risk to strengthen the risk response ability of power enterprises.In this industry background,this paper selects Yinan Electric Power Co.,Ltd.as the research object,follows the financial risk management procedure,identifies and evaluates the financial risk of Yinan Electric Power Co.,Ltd.,and puts forward suggestions on financial risk control measures.At present,the electric power industry is mainly occupied by five power generation groups.As a local state-owned enterprise,Yinan Electric Power Co.,Ltd.has a great disparity in scale and capital strength with the five power generation groups.Its ability to expand to the outside world is limited,and the exploitable resources in Fujian Province are gradually scarce.Therefore,Yinan Electric Power Co.,Ltd.is trying to invest in other industries to find new profit growth points.This paper firstly introduces the financial statements of Yinan Electric Power Co.,Ltd.from 2013 to 2018.Yinan Electric Power Co.,Ltd.firstly suffered losses in 2018 in these six years,and the degree of losses is relatively serious.In the process of analyzing the balance sheet,this paper finds that there are many bad debt reserves in other receivables of Yinan Electric Power Co.,Ltd.,mainly due to conflicts and disputes with suppliers of Yinan Electric Power Co.,Ltd.subsidiary who failed to deliver goods after collection.In the income statement,it is found that the loss of external investment and non-operating expenditure of Yinan Electric Power Co.,Ltd.in 2018 are large.In the cash flow statement,this paper finds that the uncertainty of business activities and the instability of investment activities have a great impact on it.Next,based on the relevant theory,this paper calculates the financial indicators of Yinan Electric Power Co.,Ltd.,and compares them with other companies in the same industry to identify the financial risks of Yinan Electric Power Co.,Ltd..In terms of financing,through the analysis of the long-term and short-term solvency of Yinan Electric Power Co.,Ltd.,it is found that the solvency of Yinan Electric Power Co.,Ltd.is similar to that of the same industry companies,but the ability of using cash flow to repay debts is weak and the debt structure is relatively simple.In terms of investment,this paper holds that the investment in Yinan Electric Power Co.,Ltd.is relatively stable at home,and the risk of external investment to enterprises is relatively large.In terms of operation,the proportion of bad debt provision of accounts receivable of Yinan Electric Power Co.,Ltd.is relatively high.In terms of income distribution,the current dividend policy of Yinan Electric Power Co.,Ltd.has brought great economic pressure to the enterprise,which is not conducive to its long-term development.In addition,the operation of Yinan Electric Power Co.,Ltd.will also be affected by the natural climate,national policies,markets and regions.Subsequently,this paper uses the Z-score model to evaluate the financial risk level of Yinan Electric Power Co.,Ltd.,and finds that the Z-score of Yinan Electric Power Co.,Ltd.has declined since 2015.In 2018,affected by the loss of Yinan electric power,Z-score also dropped to the lowest value in six years At present,Yinan Electric Power Co.,Ltd.is faced with greater financial risk.Based on the results of financial risk identification and evaluation of Yinan Electric Power Co.,Ltd.,this paper puts forward some suggestions for these problems.In terms of financing,this paper suggests that Yinan Electric Power Co.,Ltd.should improve its liquidity risk management system,promote capital concentration,innovate business and expand financing channels;in terms of investment,this paper suggests that Yinan Electric Power Co.,Ltd.should set up reasonable investment objectives and plans,strengthen the possibility analysis of investment projects,and track and manage investment projects.If Yinan Electric Power Co.,Ltd.can’t complete this work independently In terms of operation,this paper suggests that Yinan Electric Power Co.,Ltd.should strengthen the management of working capital and fixed assets to prevent unknown risks;in terms of income distribution,this paper suggests that Yinan Electric Power Co.,Ltd.should guarantee the stability of its own capital and adopt various dividend distribution strategies,such as stock dividend;in addition,this paper suggests that Yinan Electric Power Co.,Ltd.should strengthen the risk of its employees Awareness,and establish a sound financial risk early warning system and its evaluation system to minimize financial risk.In view of the current situation of Yinan electric power company,this paper proposes that Yinan electric power can strengthen the centralized management of the funds of its subsidiaries by establishing a financial company.Through the above writing process,this paper hopes to bring a little contribution to the financial risk management of electric power enterprises.