Research On Financial Risk Evaluation Of H Group Based On Entropy Weight TOPSIS Method

With the acceleration of urbanization in China,people’s demand for real estate is increasing.China’s real estate market has experienced rapid development for nearly 30 years,which has made great contributions to the promotion of the total national economy.However,in recent years,the development of the real estate industry has been restricted by a series of national macro-control policies such as "no speculation in housing","limited sales and purchase","three lines and four levels",and the bank credit crunch,prominent regional differentiation,and rising financing costs,and the increasingly fierce market competition has led to many real estate enterprises struggling.In order to seek more development opportunities,more and more real estate enterprises are constantly absorbing external financing to make up for the shortage of their own funds,which leads to the appearance of financial risks due to the high asset-liability ratio.H Group is an important representative of China’s real estate enterprises.However,since 2018,the net profit attributable to the parent company of the enterprise has declined by nearly 50% every year.By the first half of 2021,its real estate development business had a loss of about 4 billion yuan,while its total liabilities amounted to 1.97 trillion yuan,with serious financial risks.Therefore,strengthening the research on the identification,evaluation,and causes of financial risks can help enterprises and the entire real estate industry fully understand their financial situation,accurately identify and reasonably evaluate existing financial risks,find out the reasons and strengthen the prevention of financial risks in advance,in order to improve their ability to resist financial risks,and achieve healthy and sustainable development.Based on this,this paper takes H Group as the case study object and studies its financial risk identification,evaluation and causes.Firstly,the paper reviews relevant domestic and foreign literature from two aspects: financial risk related theories and evaluation methods,and thus forms the research ideas of this article.At the same time,this paper briefly introduces the relevant concepts and theories used to lay a theoretical foundation for the following research.Secondly,based on the case study method and introducing the basic situation and financial situation of H Group,this paper identifies the existing financial risks from the perspectives of financing,investment and operation.It uses the entropy weight TOPSIS method to evaluate the financial risk of H Group.And it analyzes the causes of the financial risks of H Group according to the financial risk evaluation results in detail,and further trigger enlightenment to the same industry.Finally,the paper draws conclusions and points out the shortcomings of the writing process in order to further improve.Through the research of the financial risks of H Group,this paper mainly draws the following conclusions.Firstly,by using the entropy weight TOPSIS method to evaluate the financial risks of H Group,it is finally concluded that the financial risk of H Group is at a high level from 2017 to the first half of 2021,and reaches the highest level in the first half of2021.Secondly,the entropy weight TOPSIS method has certain applicability and feasibility for the financial risk evaluation and analysis of H Group.This method combines entropy weight method and TOPSIS method,giving full play to the advantages of entropy weight method of objective and scientific weighting,and TOPSIS method of multidimensional and reasonable sequencing.It has strong flexibility and adaptability,without too many restrictions,which is convenient for enterprises to conduct financial risk evaluation.There are two main innovations in this paper.Firstly,scholars’ research on financial risk is mostly concentrated on the industry level at present,but few of them take specific enterprises as examples.This paper takes the individual case of H Group,which has attracted much attention at present,as the research object to study its financial risk,which is representative to some extent.Secondly,entropy TOPSIS method is mainly concentrated in agriculture,banking,pharmaceutical industry and high-tech industry at present,but it is rarely used when studying real estate enterprises.In this paper,entropy TOPSIS method is used to evaluate the financial risk of H Group.This method is objective and scientific in weighting the indicators,which can effectively avoid the subjectivity of traditional financial risk evaluation and further enrich the financial risk evaluation system of real estate industry.