A Case Study About Risk Aversion Of Company On International Commodity Price Fluctuations

This paper studies the risk of international commodity price fluctuations and studies the risk aversion of international commodity price-sensitive enterprises.Historical literature tends to study the impact of international commodity price volatility risk on macroeconomics.There are relatively few studies from the perspective of micro-subjects;some literatures on microsubjects tend to be effective in measuring risk mitigation measures for companies.As China’s enterprises engaged in commodity trade continue to go global,the related enterprises are affected by the risk of international commodity price fluctuations,and they are based on the transmission mechanism of international commodity price fluctuation risk.Risk aversion measures,comprehensive research on the impact of international commodity price fluctuation risks on enterprises is particularly important.Therefore,the research in this paper seeks to make up for this deficiency.This paper is divided into two parts.The first part is the theoretical analysis.Firstly,it introduces the theory of international commodity price fluctuations.These theories include international commodity futures price theory,hedging theory,and international communication theory of inflation.The following analysis provides theoretical support;and then analyzes and studies the risk transmission mechanism affecting international commodity prices from the aspects of import and export trade,exchange rate,international liquidity and expectations.The second part is the case analysis part.This article selects Jiangxi Copper Co.,Ltd.as the case company.Jiangxi Copper Co.,Ltd.is the largest all-industry copper processing enterprise in China.Its business covers the whole world,and its business volume,especially import and export business volume is huge.Its copper industry is representative of international commodities,and since its establishment,established a complete set of international commodity price risk avoidance system,so it has a high research value and reference significance,so the company was selected as a case company for analysis.Firstly,the case company was introduced,and the analysis of Jiangxi Copper was affected by the fluctuation of international commodity prices,and then the sensitivity analysis model was established.Based on the transmission mechanism discussed above,the LME copper spot price represented the international commodity price,and the LME copper was measured.When the spot price fluctuated,Jiangxi Copper’s sales gross profit margin,inventory turnover rate and current ratio fluctuations analyzed the risks of the company,The results tell us that when the LME copper spot price increases by an average of 1%,Jiangxi Copper’s sales profit margin increases by an average of 0.059 units,the inventory turnover rate decreases by an average of 0.038 units,and the current ratio decreases by 0.3%.The LME copper spot price fluctuations are expected.The impact of the three indicators is consistent with the impact of LME copper spot prices,but the impact is slightly lower than the LME copper spot price fluctuations,and then introduced the risk aversion of Jiangxi Copper Co.,Ltd.to deal with the risks associated with international commodity price fluctuations.Measures,and finally,based on relevant theories and analysis of cases,provide recommendations for international commodity price-sensitive enterprises to deal with the risks associated with international commodity price volatility,and evade international commodity price volatility for international commodity price-sensitive enterprises.Relevant risks provide a useful reference.