Research On Financial Risk Prevention Of Expansionary Enterprise

Financial risk is the possibility that an enterprise cannot compensate debts preliminarily borrowed. Financial risk is a major part of financing studies. Financial Risk of Expansionary Enterprise (FREE) refers to the enterprise in the expansion process because offering loans causes the possibility of each income or the net assets returns ratio uncertainty as well as the due cannot pay off a debt the financial crisis occurs.For an enterprise with an expansionary strategy and in the process of rapid expansion, the efficient recognition and prevention of FREE is a fundamental guarantee for its success. At the same time, as the economy of China is developing very quickly and joining in WTO, enterprise expansion in China is also coming into a new stage. Therefore, studies on FREE have been endued with very important practical meaning.This study starts with the theory of enterprise expanding,defines the connotation of enterprise expanding,and explains the reasons why enterprise expand. Through the analysis of the theory and styles of enterprise expanding,the article summarizes the characters and reasons of financial risk in expansionary enterprise. Then the article sums up the styles of the financial risk in China, and brings forward the measures to prevent the financial risk of expansionary Enterprise through constituting system of early warning. Besides, according to the characters and reasons of FREE, the article brings forward other methods such as strengthening finance plan, establishing the capital structure that rights and interests capital guide, debt reorganization , pursuing conservative financing policy and so on.