The Financial Risks And Their Controlling Methods In The Stage Of Enterprise Expanding

Since we have joined in WTO for 3 years, corporations are faced with the more intense market competition and the harder competition pressure. So a majority of Chinese corporations want to survive and develop by enterprises expand. By the look of the management practices of the big enterprises in foreign countries, the key of healthy development of enterprises is management, and the core of management is finance. Therefore, the assurance of successful enterprises expanding and increasing economic efficiency is to deeply know and understand financial risks in this stage and adopt scientific and effective methods to control it. This study starts with the theory of enterprise expanding, defines the connotation of enterprise expanding, and explains the reason why enterprises expand and the expansion way. Through the analysis of the principle of enterprise expanding, the article combines the management of financial risk in general corporations, sums up the peculiar financial risks in this stage and anatomize how these risks produces. The risks are such as follows: under the circumstances that enterprises expand in commonly way, there are investment risk, fundraising risk and cash flow risk mainly; under the circumstances that merger and acquisition, there are the risk of information asymmetry before M&A, merger price deciding during M&A, and payment choosing after the M&A mainly. Then, aiming at these risks, the article puts forward that using evaluating techniques such as ratio analysis, sensitivity analysis etc. and some other strategies to depress ecumenical financial risks; and using some techniques such as cautious investigation, discounted cash flow valuation to depress risks in M&A. At last, the writer choose PEG Co Ltd. as the typical case, using the results from practical research, to analyze the corporation's successful experience of financial risk controlling in the stage of expanding and its financial hidden trouble.