Study On Financing Risk And Control Of The GEM's Private Enterprises

In the past 40 years of reform and opening up,Chinese private enterprises with growing strength had made great contributions to the economic development of our country.In recent years,however,economic growth of our country is stable but on a downward trend,as the financial deleveraging process is accelerated,the development of private enterprises is encountering an insurmountable "financing mountain".Even in the environmental protection industry which is currently high-regarded,private enterprises also face with many problems,such as tight liquidity,financing difficulties and high financing cost,as a result,financing risks remain high.Therefore,it is urgent and full of practical significance to help private enterprises identify and control financing risks.Firstly,this paper researches on present situation of financing and financing risks of the Gem's private enterprises,then draws conclusions that it is generally difficult for all of them to obtain financing,and financing costs are increasing;they prefer to raise funds through debt financing methods,especially short-term bank loan,thus the quantity of Gem's private enterprises that use equity financing and mixed financing is small.The financing risks they are mainly facing with are debt financing risks,equity financing risks and mixed financing risks in sequence.Secondly,this paper takes Shenwu environmental protection company as an example to study the financing risks and control of Gem's private enterprises.Combined with its financing activities and evaluation results of Z-score model,this paper finds that the company is currently facing debt financing risks and equity financing risks.The debt financing risks consist of insolvency risk,interest rate risk and credit risk,and in addition to external factors,like the tight financing environment and poor business performance of downstream enterprises,there are also some internal reasons.Its development strategies were radical,but the proportion of cash in revenue collection was low,the way of obtaining financing was single.While the equity financing risk only refers to the risk of rising financing cost,which results from the company's weak business profitability.On the basis of the above research,this paper puts forward some suggestions for Shenwu environmental protection company andthe Gem's private enterprises to control financing risks: first,to establish a financing risk warning system and improving the risk control process;second,to enrich corporate capital reserves and deal with debt financing risks;third,to develop steadily and orderly in order to control equity financing risks.Finally,based on the above analysis,the conclusions of this paper are as follows.First,in the current environment of financial deleveraging,Gem's private enterprises generally face with high financing risks,and the main risk is debt financing risk.Second,the causes of financing risks of Gem's private enterprises are more related to their own operation and development strategies.Third,Gem's private enterprises,including Shenwu environmental protection company,have already carried out some measures to control financing risks,but the implementation of relevant measures is ineffective,the current situation of financing risk control isn't optimistic.Last but not least,Gem's private enterprises should identify existing financing risks detailedly,improve the risk control process of enterprises by establishing a financing risk warning system,then adopt more targeted control measures against specific risks,and ensure that the measures are strictly implemented.