Research On The Cash Flow Risk Management Of Shanghai Bao Gang

In Chinese economic construction and social development,the iron and steel industry has always occupied an important position.Currently,the iron and steel industry is in the “slack” period with excess capacity and many steel enterprises are caught in overall loss and even bankruptcy.For the iron and steel enterprises with high-intensive capital investment and large cash flow,many different reasons will shape a vigorous steel enterprise,but the reason that can cause the bankruptcy of steel enterprises is only one,the rupture of capital chain.It can be seen the importance of cash flow for iron and steel enterprises.Without good profit,iron and steel enterprises will not have positive cash flow,otherwise the enterprises will face the financial dilemma caused by cash flow shortage and even the risk of bankruptcy.Therefore,the smooth operation of the cash flow plays an important role in the iron and steel industry.With a leading enterprise in our country,Baoshan Iron & Steel Co.,Ltd.as the case,this paper deeply discusses the cash flow risk of the enterprise and puts forward countermeasures.Firstly,it combs and summarizes the domestic and foreign literatures.Most scholars believe that the cash flow risk has a close relationship with corporate value.The improper cash flow risk management will bring the financial dilemma at different degrees to enterprises,thus influencing the corporate value,especially for the iron and steel enterprises that have entered the “slack” period.At present,the effective management of cash flow risk is related to the life and death of iron and steel enterprises.This paper hopes to deepen the understanding of cash flow risk management through study and provide some reference for the cash flow risk management of the iron and steel enterprises.Secondly,it summarizes the relevant concepts and theoretical basis used in this paper,including the definition of the concept of the iron and steel industry,cash flow,cash flow risk,the exposition of DSO theory and the best cash holdings;thirdly,after the detailed analysis of the current situation of the iron and steel industry,it selects 25 A-share listed steel enterprises and use financial index method to analyze cash flow structure and various abilities of cash flow in the iron and steel industry;finally,it introduces the case,Baosteel Co.,Ltd.,conducts detailed analysis of cash flow structure,various abilities of cash flow and the reasons of cash flow risk of the case company with the use of financial index method and comparative analysis method and uses principal component analysis method to construct the cash flow risk pre-warning system of Baosteel Co.,Ltd.On the basis of the foregoing analysis,it summarizes the research conclusions.In recent years,due to large exchange rate fluctuations,the market demand for steel products has decreased.Baosteel adopted loose credit policies and the steel prices has been significantly reduced,thus Baosteel had the cash flow risk to a certain degree,including the deficient short-term solvency of cash flow,poor fluid ability,unstable growth ability,reduced profit ability and other risks.Finally,for the above cash flow risk problems,the main measures are as follows.Firstly,set up a special cash flow risk management mechanism,improve the audit system of Baosteel and meanwhile enhance the product competitiveness,so as to consolidate the market leading position.Secondly,strengthen the exchange rate risk management and control;focus on overseas target areas and enhance the competitiveness of overseas markets.Finally,establish a perfect cash flow risk monitoring system.