Research On Financial Risks And Prevention Of Steel Industry

The steel industry is a pillar industry to promote the development of the national economy and an important indicator to measure the comprehensive national strength of a country.In recent years,with the unstable global economic environment and the continuous adjustment of the domestic economic structure,the development of the steel industry is facing a complex and volatile situation.This year is the closing year for the reduction of capacity in the steel industry.Steel demand will enter a reduction phase,but the pressure of overcapacity will exist for a long time,and vicious competition in the industry will remain fierce.Under this environment,how to effectively prevent the financial risks of steel companies is an urgent problem that companies need to solve,and it is also the key to the sustained and stable development of the steel industry.This article will take the LF company in the steel industry as the research object,combined with the relevant theories of domestic and foreign financial risks,to conduct an in-depth research on its financial risks.This article is mainly composed of six chapters.The first chapter is the introduction of the whole article.It mainly introduces the research background and significance of this article,gives a brief overview of the research status at home and abroad,summarizes the research content and research methods of this article,and constructs the structure framework of the article.The second chapter is the overview of financial risks.It mainly elaborates the related concepts of financial risk and financial risk management theory.At the same time,it summarizes the financial risks of the steel industry based on financial risk theory.The third chapter is based on LF company as the research object to identify and evaluate its financial risks.Firstly,it briefly introduces the basic situation of LF company and its financial status in recent years.Secondly,it combines the public disclosure of LF company from 2015 to 2019.The financial statements separately identify the financial risks of LF company from the four aspects of financing risk,investment risk,operation risk and profit distribution risk.Next,considering the characteristics of the steel industry and LF’s own characteristics,the evaluation index is selected.Meanwhile,the weight of each level and index is determined by analytic hierarchy process,and a comprehensive financial risk evaluation system is constructed to comprehensively evaluate LF’s financial risk.The fourth chapter is the analysis of the causes of financial risks of LF company.It analyzes the main reasons of financial risks based on the accurate analysis results of chapter three and the actual situation of LF company.The fifth chapter is the preventive countermeasures of LF financial risks.Based on the specific reasons for the formation of risks mentioned above,reasonable prevention suggestions are put forward in a targeted manner.It is hoped that LF companies can effectively avoid financial risks under the continuous downturn of the steel industry.The sixth chapter mainly summarizes the final conclusion of this article,in order to provide reference for LF company and even the steel industry to further guard against financial risks.