Research On Enterprises' Financial Risk Management

With the establishment of the market economic comes the risk, which means the enterprises must take risk, as well as cost and profit into consideration when they make decisions. In this perspective, the study of the enterprises' financial risk management conducted based on the organizations' reality and supported by the western risk theories and practices is of obvious academic value and pragmatic significance.Based on the fundamental theories of the financial risks, this thesis systematically generalizes and illustrates the relative issues, such as risks, financial risks, the different schools of the definition of financial risk management, features, categorizations, functions, etc,.The prediction and measurement of the financial risk is the primary step towards the effective management of the risk and this paper elaborates qualitatively and quantitatively the identification, measurement and control of the risk through four key links of capital raising, investment, capital recovery and profit allocation by building the models of financial indicators and financial risk warning. The paper also analyzes the enterprises' debt payment capability indicators such as current ratio, debt ratio, etc, to demonstrate that the control of the capital structure shall be the core of the risk management and the potential investment and credit risks shall be controlled and managed via scientific investment decision making and credit analysis, which can guarantee the continuity, stability and profitability of the enterprises' capital flow and avoid the survival crisis generated by the financial crisis which are not eliminated at the stage of financial risk. Finally the paper stresses the importance of the introduction of the financial risk warning system to the effective prevention of financial crisis through prompt measures.