Research On The Causes And Control Of Financial Risks Of Evergrande Group From The Perspective Of High Leverage

In recent years,the real estate industry has also faced many problems after experiencing rapid development.On the one hand,real estate enterprises,as capital-intensive enterprises,have long project construction periods and large capital demands,and rely on high leverage and high debt to expand rapidly.On the other hand,rising housing prices also affect the development of people’s livelihood.In recent years,the state has intensified its control over housing companies and introduced a series of tightening policies to limit the scale of financing,increasing policy risks.Financial risk is one of the important risks faced by an enterprise,and its assessment and control can maintain the stable operation of the enterprise and the entire financial market.Evergrande Group is a typical case among many real estate enterprises that have developed with high leverage in recent years.It relies on debt financing to achieve business operations and has a high level of financial leverage.It is of theoretical and practical significance to study Evergrande Group as a case enterprise.On the basis of domestic and foreign literature research,this paper firstly analyzes the basic financial status of Evergrande Group in the past five years through the annual report data disclosed by Evergrande Group over the years.Secondly,analyze the financial leverage effect of Evergrande Group from the relationship between financial leverage coefficient,asset EBIT rate and debt interest rate.Combined with the results of financial risk analysis,the causes of Evergrande Group’s financial risks are summarized internally and externally.Finally,based on the goal of financial risk evaluation,the improved efficacy coefficient method is used to establish a financial risk evaluation system,and the AHP is used to decompose and determine the weight of each index layer by layer,and the comprehensive efficacy coefficient score is calculated.Based on this,Evergrande is judged The financial risk level of the group is determined,and targeted risk control measures are obtained.This paper draws the following conclusions through research: First,Evergrande Group has problems such as weak solvency,declining profitability,and insufficient operating turnover at this stage.There are huge risks in the use of financial leverage,and the negative effect of financial leverage is obvious.Second,Evergrande Group has risks such as high financing pressure,high financing cost,high internal and external investment risks,and negative net cash flow,which leads to capital shortage.Financial risks come from external reasons such as the characteristics of the real estate industry and increasingly tightening national policies,as well as internal reasons such as unreasonable capital structure,blind diversification,lack of efficient capital management systems,and high dividend strategies.Third,the financial risk evaluation results show that Evergrande Group was in a state of moderate alarm in 2018,and in2019 and 2020,the financial risks continued to deteriorate and were in a state of severe alarm,and many operating indicators were abnormal.Based on the above problems and risks,this paper proposes financial risk control measures,including establishing a financial risk early warning system,improving corporate financing capabilities,controlling excessive diversification,and enhancing cash flow stability,hoping to inspire Evergrande and other companies.