The Research On Financial Risk Prewarning Of Yaohua Glass Co.Ltd

The modern business environment is complex and changeable, the enterprise always face various risks. In these risks, the financial risk is the key risk. If the business can not prevent and defuse financial risks timely and effectively, they are likely to run into trouble. Serious risks even can bring the loss to other stakeholders and will spread to other industries. And to prevent and defuse financial risks, the first thing to do is to establish a sound financial risk early warning model. The operators can notice anomalies of the financial situation through the model, and take effective measures to avoid financial risks, in order to improve their own operating conditions. So that they can make the losses to a minimum. It’s very important to find out the meaning of financial early warning method, it can not only help enterprises become better, but also help to improve the economic environment of our country.Based on the summary of the domestic and foreign scholars who have carried on research on risk early warning of the company’s business conditions, this research reviewed the related theory of early-warning of financial risk. Considering the applicability of financial risk early warning management of Yaohua Glass, the paper choose the combination of principal component analysis and efficacy coefficient method to build the financial risk early-warning.And it makes detailed analysis of the two selected methods. In the model building process, first of all Yaohua Glass financial risk early warning index system is established on the basis of the characteristics of the company.It select five-year’s financial of the company data calculate the index. Secondly, use the principal component analysis method to determine the weight of each index.Then, combine with the efficacy coefficient method to determine the efficacy coefficient and variable standard value, which help a lot researching the financial risk of Yaohua Glass. Finally, according to the financial data of Yaohua Glass for5 years, the effectiveness of the research on early warning model was verified.The research analyse the debt paying ability, profit ability, asset operation efficiency and so on to acquaint the operation situation of Yaohua Glass.The results show that the established financial risk early warning model can indeed reflect the company’s financial risk, and promote the management to take timely preventive measures. The model can effectively help Yaohua Glass Company to improve its ability of resisting financial risks, and from the pointof view of macro level it can also provide theoretical basis and empirical support for the building materials industry as a financial risk control method.