Research On Financial Risk Prevention Of Diversified Business Of LIANGMIANZHEN Co.,Ltd

Financial risk exists in its management and can't be eliminated.So,prevention of financial risk is very important in a enterprise's risk managements.Usually a successful company prohibits its financial risk in management by financial risks recongnition,its causes' analysis and its reasonable controlling.The value of prevention of financial risk lies in reducing possibilities resulted in loss by lowering the intrinsic risk to the minimum and avoiding extrinsic risk to happen.As a diversification enterprise which expands its business to other industries,even if it develops well in its leading industry to a degree and scale it may encounter financial risk changes.Diversification strategy is many companies' choices for further development.However,wrong management strategy can engender outburst of financial risk in enterprise's diversification management and development.This situation roots in its insufficient and indifference of prevention of financial risk.This paper selects the financial risk case of Liangmianzhen Co.Ltd,a national brand,as the research object,and applies ' the Case Study Method'' and ' Normative Research Method'' to deeply analyze the financial risk faced by Liangmianzhen Co.Ltd under the diversified development strategy.Based on the previous theory of Diversified Development and Financial Risk,this paper(my study)is to find out the root cause of financial risk faced by Liangmianzhen Co.Ltd,and then propose a financial risk prevention strategy suitable for it,and provide relevant inspirations and suggestions for enterprises encountering similar problems.Firstly,taking the research results of domestic and international scholar's financial risk concept,diversification management theory,and factors and countermeasures of financial risk as the clues,this paper combines the business background of Liangmianzhen Co.Ltd and process of practicing its diversification strategy.The financial data of Liangmianzhen Co.Ltd's 2013-2017 is used to identify the financial risk under its diversification operation.Meanwhile,this article uses the quantitative analysis of F value to test financial risk changes of Liangmianzhen Co.Ltd.Furthermore,aiming at the development performance of Liangmianzhen Co.Ltd,and combining with related literature of research of financial risk,the paper deeply dissected the problem existing in the development process of Liangmianzhen Co.Ltd through four aspectsexpansion strategy,corporate governance,financing structure and risk control.It also analyses the cause of financial risk of Liangmianzhen Co.Ltd.Finally,based on the analysis of the problems of financial risk and its causes of Liangmianzhen Co.Ltd,this article throws out its suggestions.Liangmianzhen Co.Ltd should prioritize closely related diversification development and try to avoid blindly carrying out non–related diversification development in order to better achieve the synergy effect by diversification.In meantime,we must always lead our core competitiveness and strengthen our advantage to avoid excessive diversification which affect developing core product,and set up a perfect system prevention of financial risks and strenthen management of financial risks.I expect my paper can offer help for Liangmianzhen Co.Ltd and similar enterprises.