Real Estate Enterprise Financial Risk Identification And Early Warning

Real estate industry has been achieved the rapid development in the first two decades of this century.And at the meanwhile,it is becoming an important pillar of the national economy.In recent years,some real estate enterprises used debt financing to maintaining a rapid expanding operating model with “Highly leveraged” and “Highly risks”.At a time when the market is heated with speculative sentiment,property is gradually departing from its purely residential attributes.At the same time,the high-risk operation of real estate companies has also laid a huge potential problem for the market economy.Real estate companies themselves,as capital-intensive operations,are likely to experience a rapid deterioration in their financial position when they face lower rates of de-commissioning,slower returns and financing difficulties.At the same time the introduction of national macro-control policies such as the "three red lines" and "centralized land supply" is bound to change the properties of some enterprises operating with high leverage.When the dividends of the times are diluted,real estate companies face a potential "policy winter",how to resolve the potential financial risks and crisis? Internal controls and risk management have become particularly important.Enterprise financial risk identification throughout all aspects of business management,how to do a good job of risk identification and early warning is closely related to the smooth development of enterprises.In 2021,Evergrande Group,one of the leading real estate companies in China,experienced a liquidity crisis,the effects of which have not even subsided due to its extensive reach.This paper intends to discuss the generation and identification of financial risks in the real estate industry,focusing on the liquidity crisis of Evergrande Group and analyzing its financial status and the feasibility of financial early warning from the theory of enterprise financial risk identification and early warning,using the case study method,statement analysis method and comparative research method.And then,the entropy value method and the efficacy coefficient method are used to construct a financial early warning model to objectively evaluate the financial risks of Evergrande Group in a quantifiable manner.Through the analysis,we can see that the deterioration of Evergrande Group in terms of profitability,asset quality,debt risk and growth potential has led to the accumulation of financial risks,and the warning level shows a trend of increasing year by year.At the same time,the perspective is extended to the industry sector,and the early warning model constructed is used to judge the current situation of the risks of the industry enterprises,and finally,suggestions are provided for the identification and early warning of the financial risks of the enterprises in the real estate industry.By calculating and analysing the relevant early warning financial indicators of the sample companies in the recent years,we can see that the financial risks faced by companies in the real estate industry in general are increasing year by year.Enterprises should respond to macro-control policies,adjust their strategic direction in a timely manner,optimise their capital structure,actively seek innovative financing channels,raise their awareness of financial risks and improve their internal financial early warning and control system.