外文翻译---对企业财务风险的预警和控制.doc

1、译文内容On the corporate financial risk early warning and control（对企业财务风险的预警和控制）译文出处2010 International Conference on Future Information Technology and Management Engineering系 别：经济管理系专 业：财务管理On the corporate financial risk early warning and controlLiu Jingzhong Economic and trade department Shang Qiu Pol

2、yltechnic Shangqiu, Henan Province, China sqzyljz;窗体底端 Abstract - Financial risk that a firm will be unable to meet its financial obligations. This risk is primarily a function of the relative amount of debt that the firm uses to finance its assets. A higher proportion of debt increases the likeliho

3、od that at some point the firm will be unable to make the required interest and principal payments. Early warning and controlling financial risks effectively can provide a safe and steady operating environment. This paper believe that through analyzing the financial situation, preparing the cash-flo

4、w budget, establishing the financial risk index system and computational model to warn early the financial risk. On the other hand, through establishing effective capital structure, selecting correct fund-raising methods and keep the assets highly liquid to control the financial risk effectively. Ke

5、y words: Index Terms -financial risk; early warning index; control effectively 1.INTRODUCTION What is financial risk? The financial risk is finance achievement and the risk of financial standing.The financial risk separates the narrow sense and the broad sense.The narrow sense financial risk is fall

6、en into debt the causable by the business enterprise, concretely say to mean business enterprise because of lend funds but increment of lose the possibility of the ability of repaying debt and the variability of the business enterprise profits (shareholder income);The broad sense financial risk mean

7、s the finance system of business enterprise in objective existence of because of various factor function that is hard or can not anticipate and control, make business enterprise realization of financial income and expectation financial income occurrence deviate from, as a result suffer a losing oppo

8、rtunity or possibility.In this paper,financial risk refers to that because of the unreasonable structure and inappropriate financing, companies may lose solvency, which will lead to the declining in expected return and even bankruptcy of investors. How does financial risk?Financial risk arises throu

9、gh countless transactions of a financial nature, including sales and purchases, investments and loans, and various other business activities.It can arise as a result of legal transactions, new projects, mergers and acquisitions, debt financing, the energy component of costs, or through the activitie

10、s of management, stakeholders, competitors, foreign governments, or weather. In todays society, debt management is a necessary business strategy for corporate. Through debt management, corporate can make up the shortage of equity fund, and earn profit by using loan fund. The fund needed in productio

11、n and management generally come from the issued shares (or other equity funds) and debt. In which, the interest burden of debt (including bank loans, issued corporate bonds, and trade credit) is definite. If debt takes up a high proportion in the total fund of the company or the companys profit rate

12、 is lower than the interest rate, then the distributable profit of shareholders is reduced, the dividend is decreased, and the risk of stock investment is increased. For example, when a companys profit rate on fund is 10% and the corresponding interest rate of companys loan or the interest rate of i

13、ssued bond face is 8%,the interest income of shareholders will be higher than 10%; if a companys profit rate on fund is lower than 8%, the company would be required to pay loans or bonds interest by 8%,the income of common shareholders will be lower than profit rate on fund. In fact, the financial l

14、everage resulting from companys fund raising is like a double-edged sword, and when the interest rate generated by fund raising is higher than interest rate, it will bring growth effect to shareholders income; otherwise, it is the financial risk of income reduction. Corporate usually encounter a wid

15、e variety of financial risks in production and management process. Because of the existence of financial risks, corporate are very difficult to achieve the initial financial benefits, and some of financial risks may even threaten the normal operation and production of corporate. At present, in some

16、corporate, financial risks are not received the attention from the management, then how could corporate predict potential finance risks and have an effective control on them after discovering financial risks? 2. EARL Y WARNING INDICATOR SYSTEM OF FINANCIAL RISK The financial risk identifies is manag

17、e to the financial risk contents before the disadvantageous risk just appeared or appeared, identify, with accurate held various financial risk of signal and it creation reason. The financial risk early warning wants before the financial risk physically takes place and catches and keeps watch on var

18、ious small evidence to change, with benefit prevention and for adopt an appropriate counterplan to fight for time.The group wants to build up a perfect information management system, once discovering financial risk signal, the ability Be accurate to spread into a main personnel in time, in order to

19、prevent circumstances of gradually extension. To effectively prevent financial risks, corporate should take some measures and establish early warning indicator system for financial risk analysis. 2.1 Analyze the change income levels to timely detect risk signals Corporate earnings include 3 levels:

20、operating income, regular income and periodic income. Operating income means the remaining net income deducting operating costs, management cost, sale cost, tax and other additional cost from the total income. Regular income is the income based on the income deducting finance charges. While periodic

21、 income is the total of regular income and net non-operating income and expenditure. If a corporate has started to take a loss since the period of operating income, this corporate is nearly bankrupt. If the periodic income is in the black, maybe this income is due to non-core operations or accident,

22、 such as the sale of securities and real estate. If the operating income is in the black, while the regular income is in the red, then the crisis signal has appeared,which is because the corporate capital structure is irrational, borrowing scale is large, and the interest burden is heavy. At this ti

23、me, some early warning measures should be taken to avoid the financial crises 181-82.2.2 Develop the cash flow budget and analyze financial conditions The development of corporate cash flow budget is one of the most important parts in financial management. Accurate cash flow budget can help financia

24、l managers analyze financial conditions and provide risk early warning signal. As the object of corporate finance is cash or cash flow, so in the short term, whether the corporate can survive is not entirely dependent on whether it is in the black, but on whether there is sufficient cash for various

25、 expenses. The premise of the precaution is that corporation should have the profit. For common stable business, its receivables, payables and inventory can hold steady, so the net amount of cash flow generated by operating activities should be greater than net profit (otherwise, the dangerous signa

26、l occurs) 2125-126. To accurately develop cash flow budget, corporate should summarize various specific objectives, Indicate future expected income, cash flow, financial condition and invest plan in a quantized way and establish rolling cash flow budget considering ten days, month, quarter, year as

27、the period.2.3 Establish risk analysis indicator system and timely monitor financial risk The following indicators are those financial indictors commonly used in the analysis of financial risk by financial managers 1, profitability In the long run, if a corporate wants to stay away from the financia

28、l crisis, good profitability is a must, then its external financing capacity and liquidation of debts capacity will be stronger. Indicators include: Net present value rate of total assets = (cash flow generated in operating activities+ dividends or cash obtained from interest payments+ cash interest

29、 payments+ cash to pay income tax) / average total assets Net present value rate of sale = cash flow generated by operating activities / net amount of sale income Profitability of stockholder interest = net profit/ average stockholder interest 2, Solvency Basically, the risk of corporate is caused b

30、y debts and a corporate operated by its own capital will have only operating risk not financial risk. Therefore, weighing the financial risk of trading on the equity to determine the debt ratio should compare the profitability of trading on the equity and the cost rate of debt capital, only if the f

31、ormer is greater than the latter, the principal and interest can be paid back in time to achieve the financial leverage profit; At the same time, debt-paying ability also should be taken into account, that is, the amount of cash or the allocation of strength debt of its financial the liquidity; vari

32、ous whether items is capital among reasonable. Assessment indicators are as follows: indicators reflecting short-term solvency such as current ratio, quick ratio, etc; indicators reflecting long-term solvency such as asset-liability ratio, equity multiplier, long-term liabilities and working capital

33、 ratio, asset retained earnings ratio and debt equity ratio, etc.3. Economic efficiencyEconomic efficiency will directly embody the degree of corporate management. Indicators reflecting the asset management include turnover rate of accounting receivable and balance rate between production and demand

34、, among which: balance rate between production and demand=products sales/industrial output value. 4.Corporate developmental potential Indicators measuring corporate developmental potential include sales growth and capital maintenance and increment ratio. This paper applies improved efficiency coeffi

35、cient method to conduct comprehensive evaluation and standardizes several values for each evaluation indicator-one is satisfied value, while the other is non-allowed value. Then design and calculate individual efficiency coefficient of each indicators, utilize Delphi method to determine each indicat

36、or weight, and use weighted arithmetic mean or weighted geometric mean to obtain the average, that is, comprehensive efficiency coefficient. This method can be used to quantify the financial situation of corporate. 5. Financial flexibility Financial flexibility means the capacity that corporate has

37、to take effective measures to change the flow and time of cash flow for the purpose of adapting to unanticipated needs and opportunities, which is mainly related to the net cash flow generated by companies operating activities. Indicators reflecting financial flexibility include: working capital use

38、d to test the liquidity level of corporate total assets, ratio of total assets, redemption rate for due debt capital, ratio of actual net assets to tangible long-term assets, accounts receivable and inventory turnover rate, etc.3. THE CONSTRUCTION OF EARLY WARNING MODEL IN FINANCIAL RISK Financial m

39、anagers can use computer technology (such as Excel financial analysis software) to integrate the financial risk indicators which need to be analyzed to design a financial risk analysis model. Establish fundamental region of data (or establish a data table connection) and calculation analysis region,

40、 then create formulas and data connectivity relations for each analytical indicators in the cell of calculation analysis area in order to automatically figure out the value of each indicator, finally compare the value of each indicator with industry-standard value or reference value, consequently ge

41、t the early warning data at any time. For example，the values in the table are automatically generated after the establishment of analytical formulas-short-term solvency ratio and long-term solvency ratio, while the data used in formulas are connected to the accounting statement of each period. Thus,

42、 when the data in the accounting statements of each period are updated, the analytical values which need to be calculated in the model are generated automatically to help financial executives analyze the situation of financial risks of each period timely .Other financial risk analysis models are als

43、o designed like this and analyzed integrated together.4.STRENGTHEN THE FINANCIAL BUDGET MANAGEMENT OF ENTERPRISES (TO GROUP COMPANY AS THE EXAMPLE) 1.Build up the organization organization of finance budget management Then the Legal Representatives management to the group finance budget work of grou

44、p company is negative total responsibility, establish from relevant the working talent section constitute of finance budget management committee, mainly draw up the target, policy of finance budget, draw up the concrete measure and way of finance budget management, review, equilibrium finance budget

45、 project, the organization bottom reaches finance budget and moderates to solve finance budget to draw up with the problem in the performance, performance circumstance organize audit and investigate finance budget, speed up business enterprise completion finance budget target. 2.The norm finance bud

46、get draws up procedure and methodAccording to the whole development strategy of the group company, according to the procedure of up and down combine, the ratings draw up, pursue the class gather, at decision of foundation up, put forward the business enterprise group finance budget target.Each budge

47、t carries out the finance budget that the section reaches under the budget committee according to the business enterprise finance target and policy and combines oneself characteristics and the performance condition of estimate and puts forward detailed this section finance budget project, the financ

48、e budget committee should carry on full moderate, put forward the opinion of first step adjustment to the problem of detection, and the feedback give to carry out a section to give correction concerning the budget, again from finance budget committee pursue class the bottom reach each budget perform

49、ance section performance. 3.Work well to control to control with after the event in the budgetary before the event control, matterEach budget carries out a section to periodically report the performance circumstance of finance budget, to new circumstance, new problem and appear deviation bigger and important item, specially pay attention t