Research On Financial Early Warning System Of A Company Based On Cash Flow

With the arrival of the new normal economy,the economic environment faced by enterprises is complex and changeable,the increasingly fierce competition and the changing market demand make financial risk become the focus of attention of enterprises,and the related research of financial risk early warning system has become a hot topic in recent years.The traditional financial risk early warning system is based on the accrual basis data,and the accrual basis data are more likely to be manipulated artificially,so that the data distortion,not only fails to achieve the purpose of financial risk early warning,but will mislead decision makers,resulting in their wrong judgment,causing irreparable losses to enterprises.In addition,many scholars at home and abroad have shown that cash flow has a very close relationship with the financial situation of enterprises,and has a very high sensitivity in financial risk early warning,which is superior to traditional indicators.Combining with the existing research results and shortcomings in the field of financial early warning system,this paper takes Company A as an example to study the financial early warning system based on cash flow perspective.Firstly,this paper combs and summarizes the relevant research on financial risk early warning system by domestic and foreign scholars,summarizes the importance and maturity of cash flow in financial early warning research,andclarifies the purpose and significance of this study.Secondly,it introduces the concept of cash flow and the related theory of financial risk early warning,which provides the corresponding theoretical support for the whole article.After that,the basic situation of A company is introduced,and the financial situation of A company in terms of solvency,profitability,operation ability,development ability and cash flow is analyzed in depth,so as to find out the causes of financial crisis.On this basis,the advantages of cash flow indicators in financial early warning research are emphasized.Cash flow is introduced into the traditional financial risk early warning system,and financial early warning indicators and non-financial early warning indicators are designed to meet the actual situation of A company.This paper empowers the financial indicators by principal component analysis,evaluates the alertness of A company by efficiency coefficient method,and takes the evaluation results of non-financial indicators as an important supplement to quantitative analysis,so as to build a scientific and applicable financial risk early warning system for A company.Finally,the data of A company from 2013 to 2017 are substituted into the financial risk early warning system to calculate the alarm.The system operation results show that the financial situation of A company belongs to heavy alarm except in 2016.In this regard,this paper combines the results of the early warning system to find the source of warning,and puts forward preventive measures for the financial crisis of A company.By establishing a financial risk early warning system based on cash flow for A company,this paper proves thehigh correlation between cash flow and financial crisis of enterprises,clarifies the idea of constructing financial early warning system based on cash flow,guides stakeholders to increase their attention to cash flow and provides reliable and useful decision-making information.This study enriches the existing research results of financial early warning system,and provides guidance for strengthening the financial early warning consciousness of A company,improving the operation ability of A company,strengthening the fund management and promoting the healthy long-term development of A company.