A Securities Company Financial Risk And Prevention

The financial situation of the securities firm is related to the vital interests of hundreds of millions of shareholders.Between 2001 and 2005,Chinese stock market has experienced five consecutive years of stock market downturn,Nearly 20 securities companies,such as South securities,Huaxia Securities,northern securities and Hengxin securities,were disappearing by merger or reorganization;Shareholders had lost a heavy loss.At the end of 2014,Chinese stock market's trading volume soared,and the index rose rapidly.Then in 2015 Chinese stock market entered a bull market,but the market later fell sharply,and vibrated substantially,and it still had not fully recovered until 2017.In this great volatility,the securities firms in the core position of Chinese securities market also experienced the market fluctuations because of the ups and downs of the market index.With strengthened supervision of the securities industry,operation business and otc business had multi-level development;Traditional business and innovation business had coordinated development;The internet layout accelerated;The business department expanded rapidly;tThe securities firm is in great transition period,facing many financial risks.Facing the change of financial industry situation,the need of adjusting the distribution of its own business and development,and the effective defense against financial risks,it is significant for the securities company to get advantage in the industry competition,occupy more market share and sustain steady development.Especially in recent years,the securities market is better,and the domestic securities firms are almost entirely profitable,so most of the securities firms have spectacular gains,but the financial risks of the securities companies are slowly growing.As a large domestic financial company,A securities company has no financial risk crisis,but the decline of its overall operating level has been hidden by the recovery of securities market in recent years.It is necessary to carry out financial risk analysis.First of all,the article elaborated the background and significance of the selected topic,systematized and evaluated the related research at home and abroad,and explained the concepts and methods of the financial risks,internal control and risk prevention.Next,the article chose to analyze A securities company,introduced the current major financial risk prevention measures of the company,analyzed the financial status,and identified financial risks of profitability,fundraising ability,profitability of investment,etc.Then the causes of risks of Company A were analyzed from the perspective of internal factors and external factors.Secondly,according to the risk control indicators issued by China Securities Regulatory Commission in 2016,the company's indicators were analyzed.At the same time,according to the annual report data of Company A from 2012 to 2016,the Z-score model was used to conduct statistics on financial risks of the case,and compare the financial data of other securities companies in the industry.Based on the above analysis results,it is pointed out that A securities companies have some problems,including a serious unbalanced profit structure,unstable debt structure,lack of long-term liabilities,relatively small scale of assets compared with similar companies,and excessive self-operating business leading to unmatched management capability.Finally,according to the analysis of the financial risks of A securities company,the corresponding recommendations are given,including the establishment of a financial risk control system that complies with the COSO internal control framework,making up for the business short board,balancing the profit structure,increasing the long-term bond issuance,optimizing the capital structure,and increasing the asset size.