Research Of SD Company’s Financial Risk Early Warning

Opportunities and risks are co-exist in the current fierce market competition.Enterprises can improve the management at the critical moment, prevent and avoid risk effectively to win in the competition by taking early warning measures to forecast and control the risk in time. Financial risk is the most critical risk of the risks which are always faced by the enterprise now, also being strong comprehensiveness since any problem appeared at all phases of business operation can be reflected in financial condition. Furthermore, we can forecast and evaluate financial risk by the scientific methodology as financial risk can be traced and measured. Financial risk early warning system is constructed on the basement of financial indicators, taking information system as a platform. It can observe the factors which can influence enterprise’s financial conditions, count and analyze the observed results via scientific advanced warning method to forecast the likelihood of financial crisis, finally to assess enterprise risk grade and give the alarm according to the pre-determined criteria.Therefore, establishing a scientific improved financial risk early warning system is the essential precaution and an important measure to rectify error and control risk promptly for enterprises.This paper mainly adopts the method of case study and investigates the financial risk early warning of SD company.This article first elaborates the background and significance of the paper, and briefly combs the literature review at home and abroad; Secondly introduces the theories of financial risk early warning, the crisis management, enterprise diagnosis and the efficacy coefficient method, providing the theoretical assurance for later construction of financial risk early warning system. Then this article focuses on analyzing the governance structure, internal control present situation, the internal and external sources of risk of SD company, and puts forward the problems existing in the financial risk early warning method of SD company. Then according to the theories of financial risk early warning and the company’s actual situation, the paper advances the way of constructing financial risk early warning system based on debt paying ability index, profit ability index, operation ability index and development capacity index by the modified efficacy coefficient method. Finally this article applies this financial risk early warning system to SD company, analyzes the results of the early warning, then puts forward the corresponding risk prevention measures.This paper hopes that we can set up a financial risk early warning system applied to SD company on the basement of the early warning method to quantify the financial risk from theview of the company’s inner operation, to make contributions to perceiving the latent risk for SD company, developing the early warning level and the defense ability to make the goals of steadfast management and sustainable development come true.