Research On Fnancial Risk In The Conversion And Reformation Of The Productive And Operational Public Utilities

In April 2012,the Central Committee of the Communist Party of China and the State Council issued the "Guiding Opinions on the Promotion of Classified reformation of the public utilities”.It is the document points out that the functions of some public utilities are obscuring,politics and affairs area inseparable.What's worse,their operational mechanisms are Inefficient.It is urgent to solve the problems by promoting the classified conversion and reformation of public utilities.According to the guidance,by the end of 2020,the productive and operational of the public utilities will fully or basically complete the reformation,cancellation and withdrawal.Public utilities are divided into three kinds in accordance with their social functions.One is the utilities undertake administrative functions;The other utilities will participate in public welfare services,which are divided into the public welfare 1(which cannot be allocated resources by the market)and the public welfare 2(which can be allocated resources partially by the market);While the third utilities are that engage in production and operation.All of public utilities are divided according to the way of appropriation,including the full appropriations utilities,the differential appropriations utilities,and the self-employed utilities.The products and services provided by the productive and operational public utilities can be allocated by the market.After reformation,they turn to be competitive enterprises,and participate in market competition with all kinds of market entities.While,before the reforming,they are generally affiliated with the higher authorities,which have greater policy advantages and take less financial risks.To the contrary,they will be confront of the same financial risks as other market entities in financing,investment and operations.Due to the imperfect financial management,the financial risks which public utilities face are much more prominent.The transformation of productive and operational public utilities is a lengthy process,meanwhile,an important opportunity to change the management mechanism,improve the business level and accelerate the development.Therefore,it is a subject which is worthy of analysis and research that how public utilities can actively respond to and manage financial risks,enhance the comprehensive strength and market competitiveness of enterprises after reformation.In order to study the financial risks in the conversion and reformation of productive and operational public utilities,this paper takes the JT enterprises(referred to as JT enterprises after reforming)into study,using the case analysis method as the main study method supplemented by theoretical analysis.From the perspective of financial statement analysis,the JT enterprises and the listed companies in the same industry that have been transformed are compared and analyzed.According to the analysis of financial indicators such as solvency,operational capability and profitability,JT enterprises are identified the financial risks in financing investments operations.On the basis of identifying financial risks,the improved efficiency coefficient method is adopted to establish an early warning mechanism for financial risks in the reformation of business utilities.Through timely identification,accurate evaluation and effective prevention of financial risks,the overall risk management capabilities of JT enterprises will be comprehensively improved.On the basis of in-depth research,it is proposed that productive and operational public utilities could change their concepts,raise awareness,establish risk warning mechanisms,improve financial management systems,implement comprehensive budget management,deepen the integration of industry and finance,and adopt artificial intelligence technologies.The main contents of the paper are as follows:The first chapter is an introduction.This part mainly introduces the background and research significance of this paper,then Interprets the research ideas and frameworks of this paper,and explains the research methods of this paper.The second chapter contains literature review and correlative theory.Firstly,it summarizes and analyzes the literature research on the reform of public utilities.Then it sorts out the concepts and methods of financial risk warning,combined with the research content of this paper.Finally,the financial risk concept,risk management content and typical efficiency coefficient method financial risk assessment methods are introduced.The third chapter introduces the overall situation of the conversion and reformation of productive and operational public utilities.This chapter focus on the reform process,the review of the reform policy,the reforming model,and the conversion and reformation of productive and operational public utilities in the traffic survey and design industry.The fourth chapter is a case study of JT enterprises.This chapter describes the basic situation of the case and the reasons for the selection.From the perspective of financial statement analysis,this chapter compares and analyzes JT enterprises and Listed company in the same industry that have been transformed from public utilities,and analyzes financial indicators such as solvency,operational capability and profitability to identify how JT enterprises manage financial risks in financing investment and operations management.On the basis of identifying financial risks,the improved efficiency coefficient method is adopted to establish an early warning mechanism for financial risks in the transformation of business institutions and enterprises,and to analyze the causes of financial risks.The fifth chapter provides the countermeasures and recommendations for financial risks.In the analysis of the previous chapters,combined with the actual situation of the case,it is proposed that the productive and operational public utilities should change their concepts,improve their understanding,establish a risk warning mechanism,implement a comprehensive financial management system,and promote the integration of financial resources.What's more,there are more financial risk countermeasures and recommendations such as the use of artificial intelligence technology.The sixth chapter puts forward the conclusion and revelation.This chapter forms the conclusions and explains the practical significance of this paper.The main contributes of this paper as follows: in the process of collecting literature,this paper finds that the researches on the conversion and reformation of the public utilities are mostly focused on financial issues,internal control,asset allocation and governance structures.Most of them belong to qualitative research of analytical phenomena,while there is less quantitative research literature in the area.Through qualitative analysis and quantitative analysis,this paper comprehensively studies various financial risks in the conversion and reformation,which fills the blank of this research field to a certain extent.The research cases and comparative analysis objects in this paper belong to a sub-sector of scientific research and design enterprises in the national economic system.The research results will help to improve the comprehensive financial management capabilities of the case enterprises,and exert a greater reference to other companies in the same industry.The shortcomings of this paper: In the construction of the risk warning mechanism,the evaluation indicators are mainly based on financial indicators.However,the non-financial indicators are not analyzed in detail,which is a direction for further research.