The Study Of Financial Risk Control Of Large And Medium-sized Construction Enterprises

The two big economic environment in the context of the Chinese government introduced a4trillion investment plan to cope with the global financial crisis in2008and our country is in economic transition, the growing number of our country’s construction projects, which bring to the huge space for the development of the construction industry while also more intense competition among enterprises. Construction industry has a large-scale investment, low profit margins and intense competition in itself, but with the increase in the project, the increase in the number of construction enterprises, competition among enterprises become more intense, even some companies lower prices malicious none other acts of vicious competition, exacerbated the difficulties of the lack of enterprise funds. Therefore, historic opportunities facing plenty of opportunities at the same time, the construction enterprises are also faced with many unpredictable risks and challenges. And the industry characteristic of the construction enterprises is the main reasons by the financial risks of the construction enterprises. First, due to the large scale of construction enterprises to invest which lead to the required amount of money, so that the business exist the risk of difficult to raise the necessary funds during the construction. Secondly, the contract of the construction enterprises is likely to lead to the occurrence of financial risk. The contract has a fixed price contract and a cost plus contract. Fixed price contract will result in increased costs due to rising prices of raw materials and the project losses incurred finally. The cost-plus contract is also due to rising raw material prices or rising market interest rates, and can not obtain bank loans timely, resulting in construction enterprises can not be normal to start or extension of time to a disagreement with the owners, it is difficult to recover for projects. In addition, the construction enterprises are also likely to be sued due to engineering quality problems or be obtained from fine due to lead to an extension of time in which season, geology, natural environment. Above will lead to a shortage of funds, and thus not be able to undertake other projects, affect the normal production and business activities. Some owners of poor integrity, and submit the list of settlement construction enterprises, as well as change the tone and poor information, do not fulfill the terms of the contract, unit the construction’s psychology which not dare to resort to legal, deliberately delayed clearing time to take a variety of ways to achieve the purpose of long-term arrears, resulting in the presence of a large number of receivables for projects of construction enterprises. Especially large and medium-sized construction companies to undertake big projects, large-scale investment, long construction period, there are more uncertainties, financial risk so that it highlights, plus on small construction enterprises cost-effective and easy to routinely play, led to the construction market in disarray, making large and medium-sized construction companies there is a greater financial risk than small construction companies. Wherefore managing financial risks of the large and medium-sized building companies also become more complicated. The study on the financial risk control of the large and medium-sized construction enterprises has the significant worth to proceed to help the theory of managing financial risks and improve the survival and development of the large and medium-sized construction enterprises in market competition in this article.Therefore, that the basis of the theory about financial risks, internal control and control of financial risks, this paper analyzed the causes and performances of the financial risks of large and medium-sized construction enterprises, and optimize the environment of risk control of construction enterprises, strengthen identification of risk events and do a scientific classification of risk, assess risk scientifically, seek a balance on the between benefits and risks, given full consideration of resources, choose measures to deal with risks, and actively organize activities of financial risk control, frame blameless financial risks warning system, build a sound information system of financial risk control, strengthen the supervision and audit of financial risk control, building financial risk control system of large and medium-sized construction enterprises. Finally this paper carried on a depth analysis and research on A company’s financial condition and the problem of management of investment projects in accordance with the method of combining qualitative and quantitative. I hope through this study enable Chinese large and medium-sized construction companies get a better understanding and use of effective identification and prevention of financial risks, and this study can effectively avoid financial risks and play a positive role on its stand in the fierce market competition undefeated.Innovative points of this paper:(1) Broaden the field of study. This thesis is mainly carried out analysis study on financial risk in the process of production and operation of large and medium-sized construction enterprises.(2) Empirical analysis of the sample companies the construction industry in China listed companies through the use of Z-value model and F score model come to the conclusion that F score model is more suitable for the financial risk early warning.(3) Financial risk control for large and medium-sized construction enterprises put forward a new point of view using the receivables without recourse sale to truly revitalize the capital.(4) It has a practical significance for the financial risk analysis of the specific medium-sized construction enterprise. Thesis had a targeted research on the specific investment projects of Company A to analyze the causes of the financial risk and study on financial risk in the process of production and business activities. the conclusion will have practical significance to the enterprise, and even broaden this industry. The focus and difficulties of this article:(1) The focus of this study are analyzing the main financial risks that may exist on the large and medium-sized construction enterprises and proposing appropriate control measures.(2) The focus of this study is quantitative analysis of five large and medium-sized construction enterprises selected samples of the company’s financial risk identification and assessment.(3) The focus and difficult of this study is conducting quantitative and qualitative analysis on A company’s financial condition and specific investment projects and discusses the company’s investment projects in the process of production and operation of the risks and taken appropriate control measures.