Financial Risk Analysis And Control Of ZX Company Based On Cash Flow

With the help of national policies and huge market demand,the communications equipment manufacturing industry is also facing more severe challenges while welcoming opportunities.Therefore,it is necessary to focus on communication equipment manufacturing enterprises and in-depth study of their financial risks.As a leading company in China's telecommunications industry,ZX's net profit in both 2016 and 2018 was negative due to US sanctions,and financial risks increased sharply.The case of ZX has certain representativeness and typicality.Therefore,this paper aims at ZX Company as the research object,based on the perspective of cash flow,to analyze the financial risk of ZX Company,find out the problems and causes of its financial risk,and finally come to the relevant risk control strategies.This paper elaborates the concepts of cash flow and financial risk through the theory of cash flow,and summarizes the relevant theory,which lays a theoretical foundation for the follow-up study.Secondly,it introduces the general situation of ZX Company,and based on the perspective of cash flow,it analyses the current situation of financial risk of ZX Company from three aspects: cash flow structure,cash flow financial indicators and DuPont analysis.Thirdly,it deeply analyses the problems existing in ZX Company's financial risk,and finds out the causes of these problems.Finally,aiming at the problems and causes of ZX Company's financial risk,the corresponding financial risk control strategies are put forward.ZX Company has great financial risk in three aspects: operation,investment and fund raising.As a leading telecommunication company,ZX Company needs to take effective measures to reverse the recession in order to maintain its sustainable and healthy operation.ZX company's business operation is poor because of improper commodity sales methods,inadequate product strategic planning and poor inventory management;unreasonable financing methods,excessive concentration of financing time,imbalance of long-term financing structure and unreasonable distribution of benefits,which lead to negative cash flow of investment activities for many years;improper market investment decision-making and failure to identify the trend of technological development,lost the advantageous science and technology market.ZX company should actively formulate more effective risk control strategies,clarify the target market and customers of product sales,improve product strategic level,optimize inventory reserve process,adopt diversified financing channels and ways such as debt and equity,and rationally distribute profits;should clearly define investment direction,identify future market development direction and trend,and rationally set up investment scale and investment structure.The research in this paper not only has certain guiding significance for ZX's financial risk control,but also has certain reference value for the development of financial risk management of other similar companies.