Strategies Of Financial Risk Assessment And Prevention Of Jinniu Construction Company

As an important industry of the national economy, the development of theconstruction industry is closely related to people’s lives. It has the properties of a widerange, long production cycles and strong liquidity. The change of external environmentwill bring challenge to construction cost, quality and time limit for a project and alsoincrease risk. Especially since2008, influenced by the national real estate macro-controlpolicies, the development of China’s construction industry has been restricted whichcauses profitability declines. It is understood that, as of December6th,2013, China’sconstruction industry index fell4.24%. The change rate was No.7from the bottom in29industries and the construction enterprise production margins in the first three quarterswas only2.8%. In addition, the construction enterprises are faced with pad-funded,decreased price, rebates requirement and outstanding payments on the production andmanagement, and also with high debt ratio, high creditor’s rights, high non-performingloan rate and high litigation rate on the financial structure. This brings challenge to thedevelopment of China’s construction enterprises and increases the financial risk.Therefore, construction enterprises must possess with considerable risk assessment andrisk control mechanisms. Based on the above situation, in this paper, Jinniu constructioncompany is used as the main study object, and then the financial risk of China’sconstruction enterprises is further studied.In viewof current situation and future development of construction industry andaccording to the enterprise financial risk theory and method, the author choose JinniuConstruction Company as an example to analyze the financial risk. Through the analysisof external and internal factors of influencing Jinniu Construction Company’s financialrisk and identification of the factors, the author discovered the short-term and long-termfinancial risk of Jinniu Construction Company, then assessd them by the method of AHPand put forward the improved risk prevention tactics in the institutional aspect andtechnology level. So the company should not only pay attention to the current financialrisk, but also more attention to the further financial risk which the company may face. Byimproving the institutional system of the financial risk and strengthening the key areasand links of financial risk prevention, the risk will be reduced and spreaded. This canmake a company win an advantage in competition and achieve sustainable development.