A Financial Risk Evaluation Method Based On Extenics

Financial risk is the risk that generates in the whole process of the company’s financial activities, including funding risk, investment risk, capital recovery risk and distribution of income risk. It is objective and inevitable, and it cannot be completely eliminated, but we can take some measures to reduce it to avoid losses. With the economic globalization, especially the intense competition of global market, problems encountered by Chinese companies will become more complex and more serious. Therefore, the research on the company’s financial risk assessment process is more and more important.Currently, the researches on financial risk assessment models and methods are very rich, and they mainly focus on indicators and methods. In the aspect of financial risk evaluation index, this paper based on enterprise performance evaluation, combined with characteristics of sample industries, and selected 12 specific indicators of these five aspects namely the solvency, operating capacity, profitability and growth ability as the financial risk rating evaluation index system.In recent years, Extenics has developed rapidly as a new discipline, and it has very powerful formalization and quantitative tools, which can transform qualitative description into quantitative data. Therefore, combining the financial risk and Extenics theoretics, we proposed a new method for the evaluation of financial risks. In this paper, we firstly determined the research sample, the financial index and index weight, and constructed financial risk assessment extension model; Then, we determined extension field with "Quota standard method", proposed the calculation methods of correlation degree and comprehensive correlation degree; finally put forwards the financial risk assessment method. Through empirical analysis of the real estate industry as a research sample, we found that the method had a strong effectiveness and applicability.