Research On Financial Risk Evaluation And Control Of L Company

Steel industry is an important raw material industry in China.As one of the national strategic industries,it not only has an important strategic position,but also provides a solid foundation and important support for the vigorous development of various industries.Throughout the development status of the domestic iron and steel market in recent years,iron and steel enterprises are faced with the problem of overcapacity.At the same time,due to the relatively weak innovation ability,iron and steel enterprises are faced with the restrictions of environmental protection,resource conservation and other policies as well as the impact of a variety of factors,which promote the greater uncertainty in the financial activities of enterprises,so the financial management is more challenging.And financial risks are growing.Under such a complex background,if the management does not strengthen the financial risk control,it is very likely to bring a variety of financial problems to the company.This paper takes L Company as the research object,and the purpose of this study is to evaluate its financial risk,so as to provide effective suggestions for its financial risk control.Specifically speaking,firstly,paper expounds related concepts and theory of financial risk encompassing the concepts and methods of financial risk,identification of fiscal hazards,appraisal of fiscal dangers and administration of fiscal perils.Secondly,the author introduces the financial overview of L Company in detail,and then uses the identification method of financial statements to identify the financial risks existing in the four aspects of L company’s financing,investment,operation and growth.It is found that the enterprise has problems such as high debt proportion,low cost control level,excessive expansion of the company scale,and slow collection speed of receivables.Thirdly,factor analysis method and entropy weight TOPSIS method are used to evaluate the financial risk of Company L horizontally and vertically respectively.From the evaluation conclusion of factor analysis method,it is known that Company L ranks 12 th in the industry and has significant financial risk,so it is necessary to strengthen the control of four types of risk.According to the entropy-weight TOPSIS method,the evaluation results show that the financial risk is the largest in 2019,the financial risk is small in 2020-2021,and the financial risk is the smallest in 2018.Finally,according to L company’s financial risk identification and evaluation results,the use of financial risk control methods to put forward specific,targeted financial risk control suggestions,in terms of financing,improve the financing decision-making mechanism,seek for financing sources and ways of diversification;In terms of investment,we will implement a diversified investment strategy to achieve product differentiation and strengthen cost management.In terms of operation,we will improve the inventory management system,strengthen customer credit management,and constantly expand sales channels;In terms of growth,the company should avoid excessive expansion and strengthen cooperation with other upstream and downstream companies.