Study On Financial Risk Early Warning Based On Efficacy Coefficient Method

In an era of rapid economic development,operation state of enterprise is increasingly facing more complicated risks.However,financial risk is one of the most direct threat on enterprises.Therefore,prediction and prevention must be made before advent of risks,in order to promote sound development of enterprises.Taking Chongqing Brewery Co.,Ltd as the research object in this paper,to construct early warning system of financial risks then we to analyze financial risks and propose measures to avoid them.Plenty of quantitative mathematical models that can be used in the field of financial risk early warning were found through consulting and analyzing relevant literature about financial risk early warning of domestic and foreign scholars.Efficacy coefficient method will be applied to financial risk early warning of Chongqing Brewery Co.,Ltd,because it is more suitable for actual development situation of Chinese enterprises than other model methods.Firstly,current situation of the industry and financial situation of Chongqing Brewery Co.,Ltd in recent years will be analyzed,necessity of establishing the risk early warning system for it is proposed.Secondly,financial early-warning indexes that can best evaluate financial risk in the industry will be selected from five aspects,including profitability,solvency,operation ability,development ability and cash ability via index sensitivity analysis,entropy method and correlation analysis.And selected indexes will be again weighted by entropy method.Then financial risk early warning system of Chongqing Brewery Co.,Ltd will be constructed by efficacy coefficient method and its warning degree will be calculated.Finally,early warning results will be evaluated and financial risk prevention measures will be put forward from five aspects: financing,investment,product,cost and market.The purpose of this paper is to build a financial risk early warning system for Chongqing Brewery Co.,Ltd based on efficacy coefficient method.Then for the problems in operation can be found out,and monitoring and control of financial risk can be strengthened.It not only provides a reference for relevant stakeholders of Chongqing Brewery Co.,Ltd,but also plays a reference role in financial risk early warning for beer industry.