Research On Management Of Financial Risk Of Bohai Leasing Co., Ltd

Since2007, China’s financial leasing industry has been growing rapidly. There are morethan a thousand financial leasing companies, but compared to the western countries, China’sfinancial leasing industry is still at early stage, the problems they are facing cannot be ignored.Most of these companies emphasize on business and pay little attention on financial riskmanagement. It is necessary to strengthen the management of financial risk of thesecompanies.This paper analyses the management of financial risk of Bohai Leasing Co., Ltd., toidentify the existing problems and give recommendations to solve these problems. Hopefullythis can help China’s financial leasing industry to enhance the quality of financial riskmanagement.The first part of this paper is theories, describes the background, research significance,and summarizes related articles. The second part of this paper discusses the definitions offinancial risk of financial leasing. Due to the uncertainties of the lessees, related third partiesand the internal control of the company, sometimes the investors of financial leasing cannotmeet their expected return or go into bankrupt.The financial risk of a financial leasing company is wide and complicated. It comes frommacro-level, meso-level and micro-level. Macro-level includes regulatory, taxes, interest rateand exchange rate. Meso-level includes the industry risk of financial leasing and the industryrisk of the lessees. Micro-level includes the financial leasing company itself, its customersand its suppliers.The third part of this paper is case study. By using Z-score analysis, cash flow analysisand financial ratio analysis to analyse the financial risk of Bohai Leasing Co., Ltd., we foundthat the financial risk in2012was much higher than in2011.The fourth part of this paper gives constructive opinions to enhance the management offinancial risk of Bohai Leasing Co., Ltd.. These include (1) to strengthen the cooperation withbanks;(2) to adjust the business structure;(3) to implement the risk control system;(4) toprovide professional training to the team;(5) to take advantages of tax incentives etc.