Research On Early Warning Of Seven Wolfs Financial Risk From The Perspective Of Cash Flow

With the arrival of the new normal of economy,the economic environment faced by enterprises is becoming more and more complex and changeable.The increasingly fierce competition and changing market demand increase the financial risk of enterprises.The occurrence of enterprise financial risk is usually the result of various risk factors accumulated over time,but the enterprise lacks the early warning and prevention of financial risk.An early-warning system of scientific financial risk can find the source of risk accurately so that the system can help companies to achieve the purpose of early-warning financial risks.Therefore,it is very important that enterprises establish a scientific earlywarning system of financial risk.The traditional financial targets were based on the accrual system in compilation.It is more possibility to manmade operation.In consequence,the early-warning system of financial risk with traditional financial metrics lacks accuracy in monitoring of the company's financial risks.The results of many scholars' research at home and abroad show that the cash flow index is based on cash accounting method in compilation,and the financial index is more real.Hence,the financial risk's early-warning system of the cash flow index can improve the accuracy of the financial risk's early-warning results.This paper chooses Fujian seven wolves Industry Co.Ltd.as an example.First of all,this paper reviews the research status of financial risk early warning at home and abroad,expounds the necessity of establishing the cash flow financial risk early warning system;secondly,it discusses the relevant theoretical basis,providing the corresponding theoretical support for this paper.After that,it introduces the basic situation of seven wolves company and analyzes its financial risk status from four aspects: financing risk,investment risk,capital operation risk and income distribution risk.On this basis,the cash flow index is introduced into the financial risk early warning system.In order to enhance the accuracy of the financial risk early warning system,this paper combines the entropy method and Pearson correlation analysis method to screen the financial risk early warning index,and designs the financial risk early warning index system in line with the actual situation of wolves company.Then,use the entropy method to process the financial data of the seven wolves,determine the weight of each early warning indicator,and use the power coefficient method to calculate the comprehensive power score of the financial risks of the seven wolves,as well as the efficacy scores of each indicator group and each indicator.Compare with the financial risk early warning interval to determine the company's financial risk early warning alert level.The results show that the financial risk of seven wolves company in 2014 and 2015 is in the light alert level,the financial risk in 2016-2018 is in the middle alert level,and the financial risk in 2018 is the largest,among which,the profitability and financial flexibility In the light police level,debt paying ability,cash acquisition ability and development ability are in the middle police level.The operation capacity is the worst,and it is in the heavy alarm level.Finally,combined with the results of financial risk early warning to find the source of alarm,and accordingly for seven wolf company to prevent financial risk put forward suggestions.It can provide some reference for the financial risk early warning analysis of other enterprises.