Study On Financial Risk Management Of Longxin Holdings From The Perspective Of Asset Financialization

In the past,China’s financial industry and real estate industry maintained a relatively high rate of return on investment,which boosted the financial investment and holding behavior of many real enterprises.A large number of resources which should be used for production and operation activities were invested in the financial industry and real estate industry,and the phenomenon that enterprises realized cross-industry arbitrage by allocating financial assets became more and more common.Since 2016,there have been a number of defaults in China’s credit debt market,and the default subjects are not limited to state-owned enterprises and other entities.These enterprises have made a large amount of financial investment through complex capital operation,and the level of asset financialization remains high,which not only affects the main business of enterprises,but also increases the financial risk of enterprises.This paper takes Longxin Holdings as the research object and its debt default as the entry point to explore the impact of asset financialization on the financial risk of non-financial enterprises.This paper first introduced Longxin Holdings and its equity,sorted out the default process of bond "16 Longxin MTN001",and calculated the financialization level of Longxin Holdings from the perspective of asset financialization and income financialization.Secondly,the financial risks are defined.From the perspective of financial indicators,the financial risks of Longxin Holdings are identified.It is found that in the process of asset financialization,the debt paying ability is insufficient,the profit level is declining,the cash flow is short,and the financial risks are constantly intensified.Then,from the perspective of asset financialization,this paper analyzes the causes of financial risks of Longxin Holdings and finds that its frequent purchase of financial products,investment and holding of financial and real estate enterprises,providing guarantees for financial and real estate enterprises and other behaviors improve the level of financial assets of the company,but also aggravate the accumulation of financial risks.Thirdly,the financial index and asset financialization index are used to construct the financial risk evaluation index system of Longxin Holdings,and the factor analysis method is used to measure its financial risk.It is found that the financial risk level of Longxin Holdings is constantly improving in the process of financialization.Finally,this paper used the optimized Z-value scoring method to give an early warning of the financial risks of Longxin Holdings,and found that the company’s Z-value had fallen below the safety level as early as 2014,indicating hidden dangers in the company’s financial situation.When the main business of Longxin Holdings was in decline,the company made aggressive financial investment,which resulted in the rapid expansion of the debt scale and the continuous decline of the financing ability.As a result,the company’s own hematopoietic ability was seriously insufficient,the operation continued to deteriorate,and finally resulted in material default of the debt.Based on the research conclusions,this paper puts forward specific suggestions such as focusing on the development of the main business,improving the level of operation and management,and improving the ability to control liabilities,so as to effectively control the financial risks caused by the excessive financialization of assets and realize the steady operation of enterprises.