Study On Control Of Financial Risk For Agriculture Listed Companies In East China

Agriculture is the foundation of the national economy. Agricultural enterprises raise thedevelopment fund through the capital markets, increase the investment, promote the enterprisedevelopment, and adjust and upgrade the structure of agricultural industrial. Business of East China areadevelops rapidly, economic level is much higher than the rest of the country, the open of degree marketis high, and the competition is fierce. In the severe market competition, the East China agriculturalenterprise, which is lack of long-term effective support from government, have dropped in the difficultyof the performance landslide and diversified business failure in recent years. This study has shown thatthere are several important reasons of the East China agricultural enterprise performance declining:enterprises have been lack of the risk awareness, there is no financial risk control system to be builtwhich is adapted to the production management characteristics of enterprise; government support is notenough, companies can not achieve long-term financial support; government regulation is absent,corporate makes the diversification investment decisions blindly and aggressively.This study listed the East China agricultural companies’ financial statements in2008-2012for theraw data. This study analysis the financial risk status of the listed East China agricultural companiesfrom the equity return ratio, the earnings per share, the assets profit margin, the total asset turnover andthe asset-liability ratio. analyzing the causes of the agricultural enterprises’ financial risk’s formationfrom the two aspects. Using the method of combining qualitative and quantitative to identify thefinancial risk of East China agricultural enterprise in there economic activities. This study selected12financial indicators to build the financial risk control model based on the principle of the factor analysis,isolated their main factor within five observation years using the maximum variance orthogonal rotation,calculated the comprehensive performance scores of every companies in list from2008to2012,analyzed the listed companies’ financial risk condition according to the change of rank. The basic ideasand specific measures of financial risk control about the economic activities, for example, financing,investment, operation, guarantee, profit distribution and related party transactions, was put forward inthe paper. The source of risk and the main body of control must be cleared, the overall train of thoughtof the financial risk control was implemented which is named” guard before happen, control in theprocess, conclusion at the final”. For investment financing risk, the government should optimize theexamination and approval mechanism, and reduce the risk of the economic behavior on the macro. Foroperational risk, the enterprise should establish the risk control idea, manage the companiesscientifically, match the input and output, and strengthen the consciousness of risk resistance. The financial risk present situation, the forming reason, the evaluation means, the control ideas andthe specific measures have been got in this research. There is some practical significance that EastChina agricultural enterprise can converse the mode of production, can improve the mode of operation,can pay attention to risk control, can increase the economic benefit and can improve the ability ofsustainable development.