Enterprise Financial Crisis Early Warning System

Enterprise Financial Crisis Early Warning System In the highly competitive market environment, the modern enterprise faces a number of risks, enterprise survival and development of a variety of conditions, fraught with the unexpected, and because the enterprise itself is inevitably exist in this or that kind of problems and a variety of The hidden dangers, and people are not able to fully grasp the economic environment, including market companies, including changes in external conditions, so enterprise financial crises have occurred, and the financial crisis can not be absolutely avoided. A business out of line if you are in marketing, sales and profits decreased, a substantial increase in accounts receivable, product inventory increased rapidly, operating cash flow insufficient to cover its existing debt due to the situation, or the companys existing debt totaling more than the fair value of enterprise assets, net assets, negative, then the enterprises are facing a financial crisis. Led to the formation of the crisis in corporate wide range of factors, such as market demand for the product, enterprise product sales prices, movements in the prices of means of production stability, business-to-product sales price adjustment capacity, changes in variable costs per unit of product, corporate fixed - The level of total cost, as well as operators of professional quality and management experience, these factors may be due to financial factors, may also be changes in the environment of market economy, consumer demand changes, scientific and technological development, national policy adjustments, the impact of the international economy, as well as competitors and other non-financial factors caused by the change, but in any case, the nature of a large number of non-financial enterprises are often to the financial crisis, a crisis emerged, and the financial crisis is the most significant corporate crisis, the most comprehensive performance. Enterprise Financial Early Warning System is to prevent enterprises to deviate from the normal operation established track alarm and control systems, enterprise information into it based on use of data-based management approach, through a variety of financial analysis of data analysis, business management activities that exist in the financial crisis early warning of potential financial risks of real-time monitoring, in order to provide a reliable basis for management decisions. Business due to financial crisis, which led to the struggling or bankrupt are not infrequent, the financial crisis, the establishment of early warning systems for enterprises and stakeholders is of great significance. Have financial reasons for the crisis can be a business decision-making mistakes, it could be managed out of control, may also be an external environmental degradation, etc., but no one from the beginning to achieve the financial crisis has intensified as well as the deteriorating process. The establishment and the establishment of the financial crisis early-warning system can monitor the process of financial operations, forecasting, early detection of financial crisis signal, in its embryonic stage to take effective measures to prevent and control, to avoid the deterioration of the situation and create greater losses. State-owned assets management department concerned is how to ensure the maintenance and appreciation of state assets, the financial crisis, the establishment of early warning indicators that can assist in the effective evaluation of the operators operating performance, a comprehensive forecast of the companys future development prospects, make the right decisions, optimize the allocation of state resources, . The securities regulatory authorities listed companies through the establishment of a financial crisis early-warning indicator system operating performance of listed companies to conduct a comprehensive evaluation in order to establish the appropriate risk-tips system, supervision of guiding significance and beneficial to investors to make the right judgments, so that securities markets healthy development. Enterprises can use indicators of financial statements analysis, single-variable model analysis method, multi-variable model analysis method, based on experience in charge of judging, as well as case studies and other methods to diagnose the financial situation, the existence of financial crises, and the extent of the crisis. Various methods has its own characteristics and limitations. For enterprises, in practice, we should take into account the countrys macroeconomic situation, geography, industry, and many other factors, differences in choice for enterprise features, and can meet their own operational and financial management needs of the methods and models in order to achieve dynamic monitoring, early prevention, effectively prevent and avoid the financial crisis, the purpose of maximizing the financial crisis early warning system functions. For businesses, the vast majority of financial crises are predictable, and there is a progress from latent infection to the outbreak of the process from quantitative change to qualitative change, the financial crisis early-warning monitoring for these information, identification, warning and pre-control. Financial Crisis Early Warning System monitoring mainly covers corporate solvency, profitability, asset management capabilities, cash flow, capital structure, and ability to grow and so on. Reposted elsewhere in the paper for free download http:/ To enable the crisis early-warning functions are normal, full play, enterprises should establish a sound early warning of a relatively independent organization, whose daily work can be of some functional departments of a companys existing commitments, such as financial sector, business administration, planning department; the establishment of information collection and transmission mechanism, only the pairs of large amounts of data for statistical analysis in order to seize every sign of a relevant financial crisis. Efficient mechanism for early warning analysis is the key, through early warning analysis can quickly exclude the financial impact of small risk, which will focus on analysis may result in a significant impact on the financial risks and focused analysis of its causes, assessing their potential losses . Analysis of the financial crisis, clearly, should immediately start processing mechanism to develop appropriate prevention, treatment measures to minimize the loss of the financial crisis. The state-owned enterprises to build the financial crisis early warning mechanism, in addition to theory there should be scientific and practical operability, a sound system, system, strict control mechanism, strict risk control, and efficient ex post verification, but also must meet state-owned enterprises characteristics, to consider the particularity of state-owned enterprises, completeness, relevance, the cyclical nature of social and control processes. State-owned enterprises in the national economy occupies a special position to play a special role. The spirit of the third plenum of the CPC in the future of state-owned enterprises may be divided into three types, one in the core areas involving national security and must be borne by the public finance area of public welfare undertakings, there are state-owned enterprises; second is in relation to the national economic lifeline of the key industries and key areas, there are state-controlled enterprises; three have advantages in relation to the general competitive fields, state-owned capital can be eugenic bad back. Therefore, the state-owned enterprises is not a general form of enterprise organization, can not be used for general corporate rules to regulate state-owned enterprises. Of state-owned enterprises to establish a financial warning mechanism, taking into account the general application of business at the same time, we must fully take into account the characteristics of state-owned enterprises. As the state-owned enterprises have assumed the addition to the general business functions of pure competition in the market, but also bear the social and public functions, so the state-owned enterprise crisis early-warning systems design, we must strive for a perfect, we must strive to achieve two combined. First, to achieve a combination of quantitative and qualitative, it is necessary to consider the assets, liabilities, cash, profits and other quantitative indicators, but also consider the companys market share, innovation, sustainable development capacity and national and social concerns of the social contribution rate, the social rate of accumulation of non-financial indicators and qualitative factors. The second is to achieve the table and table with the Foreign Secretary, we must choose to asset-liability ratio, receivables turnover, return on assets, as reflected in the financial statements and other indicators, should also consider the enterprises engaged in trust management, futures and stocks, security Mortgage and other balance sheet indicators. From the horizontal and vertical control of grasp several key points. Lateral to address the state-owned enterprise and financial management of the risk that the main a good grasp of investment, financing, accounts receivable, internal security mortgage, related-party transactions and other acts of daily operation and management of possible risks. Longitudinal information on financial management to reflect, forecasting, decision-making and control the entire process there may be risks. In this way can the financial risk of enterprise to conduct a comprehensive monitoring and control. Different types of enterprises to the requirements of the financial situation is different. As for investment type enterprises, the focus should be concerned about increasing the value of assets, capabilities and profitability, may be the main choice of return on total assets, capital gains category, assets should be preserved by the rate of other indicators; for trade enterprises should focus on enterprise class operating capabilities, or choose to be accounts receivable turnover ratio, and indicators; for production type enterprise, the focus should be concerned about the solvency of enterprises and corporate cash flow may be the main choice of current ratio, quick ratio, asset-liability ratio, inventory turnover rate, etc. Similarly, the existence of state-owned enterprise life cycle, different periods of financial position and financial indicators have different characteristics. If enterprises in the start-up phase, business cash shortages, the lower the amount of profits and cash flow from operations is a common phenomenon that can not be this easy to judge whether an enterprise failure. In the enterprise maturity, business should have plenty of cash, debt reduction, while companies at this time if there is a cash problem, then it may be in financial crisis. Also in the business recession, report reflecting the profitability indicators have started to decline, and some may even turn negative. Taking into account not only the management of state-owned enterprises themselves, but also taking into account the state capital investors of financial supervision and management of state-owned capital investors with the right combination of corporate financial supervision. At all levels, the formation of state-owned assets supervision system, the need to strengthen financial oversight of the enterprises, strengthen internal controls to prevent corporate financial risk, and the establishment of enterprise financial crisis early warning mechanism, not to replace, but rather as an early warning mechanism to the financial crisis, financial supervision a useful addition to the financial early-warning mechanism so that enterprises organically into the work of the state-owned assets supervision and achieve state-owned assets and enterprises between the two-way warning. Corporate financial early-warning mechanism to be able to function effectively, it must set up an enterprise management information systems, such as ERP, through the management information systems to provide timely data on the complete results of operations, business management authorities based on these data, with pre-set financial early-warning indicators of comparison. When there is above or below the early-warning indicators of situations arise, it shows that the poor conditions of corporate finance, corporate governance should be based on early warning indicators of the business represented by the connotation for further in-depth study to determine to find clues, the right medicine to prevent the financial crisis to continue to deteriorate. Reposted elsewhere in the paper for free download http:/