Research On The Early Warning Of Cash Flow Risk In Clothing Industry

Due to China’s rapid economic growth and growing international trade,the market economic environment is becoming more complex,and internal rivalry is becoming more intense.Businesses are readily hampered by a variety of issues that restrict their sustainable development in this complex external environment.As a result,in order to secure the enterprise’s regular operations,it is vital to design rational development strategies and business decisions,build internal management capabilities,and enhance financial risk control procedures.Listed firms in China’s textile and apparel industry not only have to contend with a complex external environment,but they also have to deal with a variety of internal management issues,which progressively raise operational risk.Analysis of the current financial state of the Chinese textile and apparel sector from the cash flow perspective,along with the selection of representative companies for early warning testing and the formulation of improvement proposals for its issues,has significant practical implications for the survival and growth of listed textile and apparel companies.In order to identify the underlying causes of the financial crisis,this article first defines the textile and apparel sector in China and conducts a comprehensive study of its financial position based on knowledge of the present situation of domestic and international research.Second,preparations are made for the creation of a financial early warning model.Companies in financial crisis were designated as ST businesses and enterprises with weak financial standing.17 financial indicators were then chosen from five dimensions—profitability,solvency,operating capacity,development capacity,and cash structure—based on the cash flow perspective,and combined with the existing state of the textile and apparel industry to create a financial early warning system.With the aid of the statistical program SPSS,the sample data was then tested using a combination of factor analysis and the Logistic method to screen out 11 valid indicators that had a significant impact on the outcomes.The indicators were then factor analyzed and then combined into four common factors to establish a Logistic model.In order to identify the most accurate crisis determination value,the model was tested frequently.Finally,19 companies—thirteen normal and six crisis—were employed to gauge the model’s accuracy.The findings revealed that the Logistic financial early warning model’s overall percentage of accurate predictions based on the cash flow perspective was 89.47%,and the percentage of correct predictions for companies in financial crisis was as high as 83.33%,demonstrating the model’s high accuracy and effective early warning capability.The LX apparel firm is ultimately chosen to implement the early warning approach and suggest specific remedies to address the situation,serving as an example for other businesses’ crisis early warning.