Study On Early Warning Of Financial Risk Of Equipment Manufacturing Listed Companies In Shaanxi Province

Early warning of financial risk is an important means to prevent financial crisis. It is based on the accounting information as well as other relevant information of the corporate. Through various methods, it can be used to analyze the changes in financial index of the corporate so that possible operational risks can be promptly presented to the corporate owners and other stakeholders. Besides, it can also be used to analyze all possible factors resulting in financial risk, thereby the owners can be prepared with relevant countermeasures lest the corporate get bankrupt. An empirical study of the equipment manufacturing listed companies in Shaanxi Province is done in this thesis to seek appropriate kernel financial index and to establish a more specific and comprehensive early warning system of financial risk. This is theoretically and practically important for examining and avoiding financial risk for those equipment manufacturing listed companies in Shaanxi Province.After elucidating the research background information, purposes and significance, some related concepts of financial risk are introduced. Then under the guidance of the theory of financial risk and early warning system of financial risk, an existing model is used to empirically make analysis of equipment manufacturing listed companies in Shaanxi Province, as well as to evaluate its applicability. Furthermore, Balanced Score Card (BSC) and Analytic Hierarchy Process (AHP) connecting with the actual situation of those equipment manufacturing listed companies in Shaanxi Province, are used to establish a financial risk index system basing upon the four dimensions of the BSC. Then the sattyl-9scaling method combining with the Delphi method (also called the expert evaluation method) is given the right to re-build the financial warning model for those equipment manufacturing listed companies in Shaanxi Province.Based on the BSC, combining with the actual situation of those equipment manufacturing listed companies in Shaanxi Province, the early warning index system of financial risk will be divided into two levels-the financial level and the non-financial level. The financial level corresponds to the financial dimensions of the BSC, including the traditional accounting ratio as well as the cash flow index. And the non-financial level will be selected among the three dimensions of customer, internal operation process, learning and developing. To think in terms of financial and non-financial levels, attention should be paid not only to the short-term business objectives and performance index, but also to the long-term strategic objectives and performance index. Therefore, the defects of the existing model can be overcome. Under the guidance of the financial risk warning system, those equipment manufacturing enterprises in Shaanxi Province can avoid financial crisis from the four dimensions of finance, customer, internal operation process, and learning and developing. To avoid the crisis just from the traditional financial index will not benefit those companies, the financial and non-financial index should be put into consideration, so that those companies can advance both internally and externally and get long-term development. This conclusion mainly attributes to the combination of the BSC and the early warning of financial risk system.a series of reasonable financial risk prevention measures can be put forward. First, a cash flow index is put forward from the above mentioned four dimensions. Therefore, the net cash flow in operating activities can be improved, the corporate capital can be protected, and the capital accumulation can be increased. Besides, those companies should strictly regulated their accounting systems and accounting processes, improve the transparency of accounting information, and strictly implement the system of incompatible duties separation.They should also make use of new energy-saved raw materials and increase productivity through science and technology to reduce costs. At last, they had better take good management of the equipment and fully use production capacity to improve productive efficiency.In addition, considering the characteristics of the equipment manufacturing industry, the focus of attention should be put on equipment perfectness, market share, cost reduction of every single product and rate of capital accumulation.