Research On Financial Risk Early Warning Of Company B From The Perspective Of Cash Flow

In recent years,with the increasing complexity of the economic environment,the living environment of enterprises is facing great uncertainty.Meanwhile,the overall operation of China’s clothing retail industry is slowing down,with the rapid development of ecommerce and the arrival of foreign fashion brands,domestic clothing enterprises are facing greater pressure of industry competition.At the same time,more and more scholars pay attention to the financial risk control of enterprises.However,the traditional indicators based on accrual basis have room for manipulation in financial fraud and can not really reflect the financial situation of enterprises.Based on the above background,by combing the relevant literature and theoretical basis,it is found that the business activities,investment activities and fund-raising activities of enterprises are carried out around cash flow,and the financial risks arising from various economic activities can be shown through cash flow.Cash flow perspective may be more advantageous to enterprise financial risk early warning.Therefore,this paper takes B company as the research object,first of all,by collecting the annual report data of the past five years,starting from the company’s traditional four major financial capabilities and cash flow summary,to analyze the current situation of its financial risk.The analysis shows that the financial risk of B company is severe,the operation state of the enterprise is poor,and it is at a backward level compared with the same industry,so it is urgent to build a financial risk early warning system from the perspective of cash flow.Then,this paper constructs the financial risk early warning index system from six aspects based on the cash flow perspective,and then uses the principal component analysis method to determine the weight of the index variables in the model,and then obtains the financial risk early warning results of B Company from 2017 to 2021 based on the improved efficiency coefficient method,which are heavy police,medium police,heavy police,heavy police and heavy police respectively.Finally,according to the early warning results,this paper makes a further analysis of its various capabilities,and on the basis of clarifying the source of warning,from optimizing the debt structure,innovating financing channels,improving sales capacity,strengthening cost control,improving receivables management,strengthening inventory management,strengthening investment project supervision,increasing investment in research and development and other aspects put forward targeted risk response strategies and relevant risk prevention and protection measures.This study provides a set of standardized operation process for B company to identify financial risk,judge its financial risk level and take corresponding intervention measures.this not only enriches the research case of financial risk early warning management from the perspective of cash flow,but also provides a certain reference value for other companies in the clothing industry.