Study On Financial Risk Forewarning For Water And Electricity Supply Companies Based On Neural Network

Because the market environment changes day by day,every enterprise could face all kinds of financial risks. Once the financial risks are out of control, the financial failure will come. The cases which enterprises fell into financial hardship and even went to bankruptcy due to financial crisis have been not uncommon. However, how to forecast the potential financial risks exactly and make response quickly is a real and urgent task faced by every enterprise.Water and electricity supply industry as the backbone of the energy industry in China's economic development and strategic needs has played a decisive role, its operating conditions, especially financial risk profile, directly affect or even determine our country's economic situation and the degree of risk. Firstly, this paper explains the relevant research and elaborate the basic concepts and theories of the financial risks and forewarning on the basis of widely accessible relevant literature at home and abroad. Secondly, this paper analyzes the financial position of the water and electricity supply companies, proposing the necessity of establishing the financial forewarning system. Thirdly, this paper builds the indicator system that suitable for water and electricity supply companies from five aspects according to the principles of the financial forewarning index system, analysis on the capacity of claim paying, capacity of making profits , capacity of operating , cash flow and then compares the result model. Finally, according to the forecasting results, this paper puts forward some measures to prevent risks for water and electricity supply companies, avoiding the financial risk to become to the financial crisis.