Study On Financial Risk Response Strategy Of SANY Heavy Industry From The Perspective Of Financial Flexibility

The volatile market environment and complex internal financial relationships are important reasons for corporate financial risks.SANY’s 2022 performance was under pressure.From an external perspective,this is mainly due to the industry being in a downturn and macroeconomic growth slowing down.From an internal perspective,the "Two New Three Transformations" strategy established in 2021 has caused certain pressures on the company’s operating costs.At the same time,compared to XCMG and ZOOMlION,SANY has a smaller global market share and a slightly single product layout.Faced with the constantly changing market environment and arduous innovation tasks,SANY’s existing rigid financial risk management methods are difficult to adapt quickly.However,financial flexibility,as an effective means to cope with uncertainty,can supplement the shortcomings of rigid financial management,and guide the self-improvement of the corporate financial management system.Firstly,this paper reviews,summarizes,and comments on the financial flexibility,financial risks,and their relevance.Then,it introduces SANY’s profile and briefly explains the current status of its financial management activities and financial efficiency.The Z-Score model is used to judge that the probability of SANY’s financial risk occurrence is gradually increasing.Finally,the paper focuses on four aspects: funding flexibility,investment flexibility,operating flexibility,and profit distribution flexibility.It explores the reasons for the formation of SANY’s financial risks,uses the entropy method-TOPSIS to establish a comprehensive evaluation analysis model of SANY’s financial flexibility,and obtains the comprehensive score of SANY’s financial flexibility in recent years and its weaknesses.Finally,it puts forward optimization suggestions for the deficiencies of financial flexibility.From the perspective of financial flexibility,the sources of SANY’s financial risks are mainly:from the perspective of funding flexibility,SANY’s external financing channels are relatively few and financing constraints have caused a shortage of funding flexibility reserves.From the perspective of investment flexibility,SANY’s low R&D efficiency and low cost utilization leads to slower growth of investment flexibility.From the perspective of operating flexibility,SANY’s aggressive credit sales have resulted in low cash recovery efficiency,and the effectiveness of using forward foreign exchange contracts for hedging has jointly led to a lack of operating flexibility acquisition.From the perspective of profit distribution,SANY’s insistence on a single high dividend payment policy has caused excessive release of profit distribution flexibility.Based on the above analysis,the following strategies are proposed to deal with financial risks:using national policies to absorb capital from countries along the "Belt and Road" route,sign gambling agreements to carry out private equity financing to increase financing structure flexibility;strengthen cash flow management and optimize debt variety structure to improve financing constraints flexibility.Refining research and development investment,optimize research and development expenditures,improve research and development investment flexibility;control transportation costs,reduce raw material costs,and improve cost investment flexibility.Restructuring the organizational structure,improve credit risk control measures to increase credit sales flexibility;select hedging tools,establish a foreign exchange risk control mechanism to supplement foreign exchange rate flexibility.Diversifying distribution methods,expand profit distribution flexibility with multiple payment methods.