Strengthening Enterprise Financial Risk Control

Facing financial risks, we usually adopt strategies such as avoiding risks, controlling risks, accepting risks and diversify risks.

Controlling risk is the core of corporate financial risk governance.

Strengthening financial risk control of enterprises.

Under the condition of market economy, fund-raising activities are the starting point of an enterprise's production and operation activities. Improper management measures will cause great uncertainty in the efficiency of raising funds, resulting in financing risks.

There are two main channels to raise funds for enterprises: one is the owner's investment, such as increasing capital and expanding shares, and reinvesting after tax profit distribution.

The two is borrowing funds.

For the borrowed capital, when the enterprise obtains the financial leverage benefits, it borrows the capital in debt operation, thus giving the enterprise the possibility and uncertainty of the loss of solvency.

There are several specific reasons for financing risk: the risk of increasing the cost of raising capital due to interest rate fluctuations or raising funds above the level of Ping interest. Besides, there are also funds organization and scheduling risks, operational risks and foreign exchange risks.

Therefore, we must strictly control the scale of liabilities.

The financial risks of enterprises are mainly manifested in the following aspects: cash flow is insufficient, enterprises can not pay debts in due time, sales are down unusually, cash has declined significantly, accounts receivable has increased substantially, and some financial ratios have been abnormal, such as asset turnover has dropped significantly, asset liability ratio has increased substantially.

Through the analysis of some quantitative financial indicators, such as solvency index, profitability and other indicators, we can judge the size of financial risks faced by enterprises.

Long term solvency mainly includes

In particular, the tangible asset liability ratio, the property rights ratio, the earned interest ratio and so on.

Tangible asset liability ratio = Total Liabilities / tangible assets. The smaller the ratio, the stronger the long-term debt paying ability of enterprises.

The ratio of property rights to total liabilities / total owners' equity reflects the degree of protection of owners' rights and interests to creditors' rights and interests. The lower the value, the stronger the long-term debt paying ability of enterprises.

Interest multiplier = pretax profit / interest expense, which reflects the guarantee of profitability for debt repayment, and is usually obtained.

The higher the level of debt protection, the higher the degree of protection.

Profitability indicators include total assets return rate, roe and so on.

The total assets return ratio = (gross profit + interest expense) / average assets total, the higher the ratio, the better the asset utilization efficiency of enterprises.

The return on equity is the index reflecting the level of investment income of its own capital, which is the core of the enterprise profitability index.

Net asset yield = net profit / average net assets, the higher the ratio, the higher the degree of protection to investors and creditors.