Research On Financial Risk Recognition And Prevention Of China Evergrande Group

As the mainstay industry of our country,the real estate industry plays an important role in the composition of national economy.In recent years,the government has introduced several policies to rein in the real estate sector in an effort to curb a housing bubble and soaring home prices.In particular,the "three red lines" have a significant impact on the financing of real estate enterprises.Since 2020,real estate enterprises have been struggling in the market contraction caused by the epidemic and the "financing difficulties" caused by strict regulation.The high financial risks caused by the "high leverage" and "high inventory" of real estate enterprises have been exposed in this environment.Many real estate enterprises have defaulted on their bonds due to the break of their capital chain,and even went bankrupt.As the real estate industry is related to the national economy and people’s livelihood and has a significant impact on social stability,the management crisis faced by real estate enterprises has also attracted the attention of researchers,among which,the financial risk of real estate enterprises has attracted more and more attention.This paper chooses China Evergrande Group(HK03333)as the case study object.Based on the financial data of China Evergrande from 2016 to 2021,combined with the current environmental background,the SWOT analysis method was used to analyze the background of the "Evergrande crisis".According to the financial statements and industry-related data,the paper identifies the financial risks of China Evergrande Group from the perspectives of financing,investment,operation and profit,analyzes their causes,and uses the improved Z-score model to measure and evaluate the financial risks of China Evergrande Group.In addition,according to the financial statements and relevant data of the industry,the financial risks and causes of China Evergrande Group are analyzed from the perspectives of financing,investment,operation and profit.Thus,the research conclusion is drawn: The debt maturity structure of China Evergrande Group is not reasonable,the capital structure is not stable,the proportion of internal investment is not reasonable,the external expansion is blind,the business model is vulnerable to the influence of the market environment and relevant policies,and the company’s inventory management is not good,the turnover of accounts receivable is low,the profitability is declining,the income distribution is not reasonable and other problems,led to the financial risk,leading to the occurrence of "thunder" event.In view of these reasons,this paper points out that China Evergrande Group,as well as all Chinese real estate enterprises should pay attention to the improvement of corporate capital structure,reduce the scale of debt,timely pay attention to the market environment and policy changes,reasonable planning of internal and external investment,and pay attention to the management of inventory and accounts receivable,improve the efficiency of capital utilization,enhance the profitability of enterprises,and reasonable income distribution.So as to better prevent or deal with the real estate enterprises common financial risks.