Empirical Research On The Financial Risk Of Chinese Listed Foreign Trade Companies Based On The Z-score Model

The health and development of any enterprise is directly related to its financial risk. Research on the financial risk of all kinds of enterprises is becoming a more and more important topic in relevant fields. In the environment of an increasingly complicated economic market, the financial risk of a company is not only affected by the external macro environment, but also influenced by the internal micro factors. The uncertainty of all the external and internal factors poses threats of financial risk to enterprises at every moment. For a company, the bigger its financial risk is, the easier for it to fall into bankruptcy and adversely affect the healthy development of the whole national economy and the stability of the whole society. Under this background, to evaluate the financial risk of enterprises and then make suggestions of controlling financial risk is helpful to promote the healthy and stable development of enterprises. Foreign trade enterprises play a more and more important part in the development of our national economy. Therefore, evaluating the financial risk of listed foreign trade companies in recent years and then posing controlling methods has very important significance both theoretically and practically.On the basis of existing research at home and abroad on financial risk and according to the Z-score Model proposed by Professor Altman, this paper takes the 23 listed foreign trade companies of our country from 2009 to 2013 as research objects, and carries out empirical study on the financial risk of Chinese listed foreign trade companies in recent years. Using the original data obtained from annual financial reports of the 23 sample companies, this paper calculates the annual Z-score which measures the degree of financial risk according to the Z-score Model. Based on the descriptive statistics analysis by SPSS and Excel, the results show that during the recent five years, the overall financial risk of Chinese listed foreign trade companies is in “Safe Zone”. However, the financial risks of different companies vary greatly, and the polarization of Z-score between “Safe Company” and “Dangerous Company” has been very clear.Choosing “Safe Company” ORIENT INTERNATIONAL ENTERPRISE, LTD. and “Dangerous Company” JIANGSU SAINTY CORP., LTD. as case study, this paper decomposes and analyzes the influencing factors of the Z-score. The conclusion is that X4 and X5 fluctuate more obviously than X2 and X3 during the study period. According to the meaning of each index, the paper determines the cause of the fluctuation of financial risk as follows: mismatching of market capitalization and total liability, inefficient use of assets, improper distribution of profits and undesirable liquidity of assets.Based on the empirical research and case study on the financial risk of Chinese listed foreign trade companies, this paper recommends a series of controlling methods from the perspective of enterprises themselves. The foreign trade companies should establish a controlling mechanism of financial risk matched with the Z-score Model; should develop a scientific and reasonable profit distribution policy and make full use of the accumulated profits; should choose the right financial methods and optimize the capital structure; should strengthen the management of working capital; should make the most of the particularity of the listed company, strive to improve their level of operation and management; should deliver positive signals to the capital market continuously to avoid investors losing confidence of the future of the company, or will driven down its share price sharply.