The Application Of Financial Crisis Warning Mechanism In Family Business

It is still remains some unstable factors which will affect the stability of the global economy behind the economic recovery. United States debt repayment capacity is fragile, and highly dependent on borrowing for repaying which will strike the international financial market, weaken the momentum of economic recovery and bring negative impact to the economic stability. Furthermore, disorderly response to United States monetary policy normalization is still a significant risk. Because it may lead to a substantial rise in global interest rates, while a sharp reversal of capital flows. In this environment, the possibility of enterprises which suffer financial crisis because of the financial problems is still large. Because the family business is the important component in our national economy, this article selects it as the purpose. However, due to the special nature of the family business, high risk of business in the future uncertain environment comes from the not normative of the financial aspects. Therefore, the establishment of financial crisis warning mechanism in family business has practical significance, making business more competitive in the ever-changing and risky environment.From the perspective of family business, first we discusse the related definitions, determine the exact meaning of the family business in this paper, analyze and summarize family business characteristics. After that, definite and overview the financial crisis, based on a literature review and a major crisis currently facing the family business,especially financial crisis and weak points, and is described in detail in the text of the main financial crisis early warning mechanism of the academic model. Generalize the main crisis especially in the financial crisis and weakness which the family business is facing now according to the literature. And introduce the details of the main financial crisis warning mechanism in academic. Then take T steel as an example,analyze the current demand of family business building an financial crisis warning mechanism. It is mainly about to grasp the overall profile,current financial situation and the main risk in T steel. On this basis, we draw the necessity for T steel establishes financial crisis warning mechanism. For the actual situation of the company, we compare the operability of different models to choose one. According the model and index construction principle, we establish indicators system of financial crisis warning the financial indicators through the determined indicators and set the warning limits. Finally,we adopt safeguards to keep the model working according the actual situation of company and introduce the emergercy system when the cisis happen.