Carrying out financial situation assessment and financial early warning analysis is beneficial for enterprises to ensure the development of production and business activities in a good direction and take timely measures to prevent and avoid financial crisis. The following is my financial early warning analysis paper for your reference.

Financial Early Warning Analysis Paper Mode 1: Enterprise Financial Early Warning Mechanism Analysis Paper Keywords: financial distress; Financial early warning; mechanism

From the perspective of enterprise's financial distress, this paper introduces various current financial early warning models, compares and analyzes their advantages and disadvantages, and puts forward some suggestions on the construction of enterprise's financial early warning mechanism.

I. Introduction

As a legal person, the inevitable problems of an enterprise are survival, development and profit. Because the macro vision of economy, politics and law faced by enterprises is often uncontrollable, at the same time, due to the unreasonable capital structure and other problems of enterprises themselves, enterprises are facing various potential risks. How to successfully resolve these risks and protect the development of enterprises is the focus that every enterprise executive has to pay attention to. From the financial point of view, combined with the research results of some listed companies at home and abroad, this paper discusses the ways to establish the financial early warning mechanism of enterprises.

Second, the analysis of the causes of financial difficulties

When an enterprise encounters financial difficulties, it usually manifests itself in the short-term capital turnover of the enterprise, and then a series of chain reactions are brought to the enterprise due to improper handling, which eventually leads to the inability to make ends meet or even insolvency. Combined with some domestic and foreign enterprises on the "dead end" case, usually the cause of the financial crisis can be attributed to the following aspects:

1. Financial crisis caused by fund recovery. The financial crisis caused by capital recovery is caused by the uncertainty of the time and amount of capital recovery in the process of product sales or service provision. In the fierce market competition, credit sale is the main means for enterprises to promote sales and occupy market share, but it also bears the opportunity cost of others occupying the operating funds of enterprises and the bad debt loss that cannot recover the payment at maturity. For a long time, under the principle of "accrual basis" accounting recognition, enterprises only pay attention to book profits, not cash flow, and more funds are occupied by customers, which makes profits inflated and enterprises fall into a serious shortage of funds or unable to turn around.

2. Financial crisis caused by financing. The financial crisis caused by financing is the possibility that enterprises can't repay the principal and interest of debts because of debt financing. There are two reasons: first, enterprises fail to grasp the scale, interest rate and term of liabilities when raising funds, which leads to the accumulation of non-performing loans of banks or other institutions and heavy liabilities, thus triggering a financial crisis. Secondly, it is caused by poor management, insufficient net cash flow from operating activities and quick assets in current assets, and low quick ratio.

3. Financial crisis caused by investment. The financial crisis caused by investment refers to the fact that when an enterprise invests in related projects internally or externally, due to various uncertain factors, the original investment amount cannot be recovered on schedule, or it cannot be recovered at all, which makes the enterprise suffer losses. This crisis is mainly due to the failure of enterprises to accurately predict the cash flow of investment projects, which will directly endanger the survival and development of enterprises. Usually, financial crises caused by excessive expansion occur from time to time in China, and the collapse of Giant Group is a typical example.

4. Financial crisis caused by asset depreciation. The financial crisis caused by asset depreciation is usually due to various macro uncertain factors, such as inflation, policy changes, legal constraints, scientific and technological development, etc., which make investors suffer from depreciation and depreciation losses, thus leading to insolvency.

5. Financial crisis caused by profit distribution. The financial crisis caused by profit distribution is due to the improper distribution policy formulated by enterprise decision makers, which has an adverse impact on the future production and operation activities of enterprises. For example, if the dividend rate is too high, although the stock price will rise in the short term, it will bring down the solvency and financing ability of enterprises and restrict their future development.

Third, the financial early warning model analysis and summary

Usually, the formation of enterprise financial crisis is a process from quantitative change to qualitative change. The quantitative change stage is latent and difficult to find, while the qualitative change stage is often "incurable" and hopeless. How to correctly predict the potential financial crisis of enterprises and eliminate the financial crisis of enterprises in the initial stage has always been a problem worthy of consideration and discussion. Based on the empirical research results at home and abroad, the financial early warning model can be summarized as follows:

1, unary discriminant model. One-dimensional discriminant model refers to a forecasting model that takes a certain financial index as the standard to judge whether an enterprise is bankrupt or not. The main idea of the unitary discriminant model is to give early warning to enterprises in financial distress by comparing the significant differences of a certain financial index between enterprises in financial distress and enterprises in non-financial distress. The earliest research on financial crisis early warning is the univariate bankruptcy prediction model proposed by Fitzpatrick. However, because the model uses a single indicator as an indicator to measure the financial difficulties of enterprises, it is difficult to be representative and easy to lead to everything. Therefore, the application scope of this model is very small.

2. Multivariate linear judgment model. Multivariate linear function model is a model that summarizes multiple financial ratios of enterprises and obtains a total discriminant score to predict the financial crisis of enterprises. It examines the financial situation of enterprises from a global and comprehensive perspective, and takes precautions to avoid or delay the occurrence of financial crisis. Z-fraction model is the most widely used model among multivariate linear function models.

3. Multiple logistic regression model. The goal of multivariate logistic regression model is to seek the conditional probability of the observed object, so as to judge the financial situation and business risk of the observed object. It is based on cumulative probability function, and does not assume that the independent variables obey multivariate normal distribution, and the covariance of the two groups is equal. Ohlson first used multivariate logistic regression model to predict bankruptcy. By analyzing the distribution of sample companies in the bankruptcy probability interval and the relationship between two kinds of errors and the cut-off point, he found that there are at least four variables that affect the bankruptcy probability of companies: company size, capital structure, performance and current financing ability.

4. Multivariate probability ratio regression model. The multivariate probability ratio regression model also assumes that the bankruptcy probability of the enterprise is p, the enterprise sample obeys the standard normal distribution, and the p quantile of its probability function can be linearly explained by financial indicators. Its calculation method is very similar to the multivariate logistic regression method. Firstly, the maximum likelihood function of enterprise samples is determined, and then the values of related independent variables are obtained by finding the maximum likelihood function. Then, the probability of enterprise bankruptcy can be obtained by using the calculated multivariate probability regression model. Different from the other models mentioned above, this model mainly takes the size of P value as the boundary to judge the bankruptcy of enterprises.

5. Artificial neural network model. Artificial neural network model is a model established by non-financial indicators, which mainly applies neural network classification method to financial early warning. Artificial neural network is a parallel decentralized processing mode, and its construction principle is based on the simulation of human brain nerve operation. Artificial neural network has good pattern recognition ability, and can also overcome the limitations of statistical methods. Because of its fault tolerance, it does not need strict data distribution, does not need to consider whether it conforms to the assumption of normal distribution, and has the ability to deal with autonomous omissions or errors, and can deal with non-quantitative variables. The most important point is that the artificial neural network has the learning ability, and it can carry out self-learning training at any time according to the newly prepared data, and adjust its internal storage weight independent variables to correspond to the ever-changing business environment.

Fourth, corporate financial early warning mechanism recommendations

It is precisely because of the causes of financial crisis and the diversity of enterprise financial early warning models that enterprises have many choices when formulating financial early warning mechanism.

1. Enterprises should reasonably choose the predicted financial indicators according to their own actual conditions. Different enterprises face different risks in different development periods. It is a crucial step to choose a reasonable index according to the enterprise's own situation. For example, in the stage of rapid expansion, we must pay attention to the debt scale, so we must consider using the debt scale for financial early warning.

2. The choice of mode should also be based on the information that the enterprise can actually obtain. The financial data of different types of enterprises are often very different. At the same time, some data may have been artificially changed, which will lose practical significance and need to be eliminated to improve the accuracy of early warning.

3. Enterprises should pay attention to the combination of qualitative analysis and quantitative analysis. Quantitative analysis is often objective and easy to measure, while qualitative analysis is subjective and vague. The risks and crises faced by enterprises are increasing day by day. At this time, the early warning function is not only to calculate several ratios, but also to compare several indicators. It is necessary to establish a systematic method base and model base, make full use of modern computer technology, network communication technology, database technology, management, finance and statistics, and strengthen the application of qualitative analysis methods while attaching importance to quantitative analysis.

4. Follow-up management of financial early warning mechanism. Follow-up management can ensure the normal implementation of early warning mechanism and the full play of early warning function, mainly including normal supervision and maintenance, and ensure the smooth data interface between early warning mechanism and other management systems and the full enjoyment of data; Financial business data, index system and early warning critical standards are updated in an orderly manner to ensure the accuracy and timeliness of early warning functions; Ensure the security and integrity of all kinds of databases, and strengthen the anti-virus intrusion, anti-hacker theft and anti-illegal operation of databases.

5. Improve the internal control system of enterprises, improve the quality of accounting information and enhance the effect of financial early warning. Whether the internal control system is sound or not is directly related to the authenticity of various indicators and financial ratio calculation in the financial early warning mechanism. Therefore, the premise of establishing financial early warning mechanism is that listed companies should have a sound and effective internal control system, which can be implemented consistently. A good internal control system is an indispensable part to ensure the quality of accounting information. Good accounting information quality is the guarantee for the financial early warning model to play its normal role.

Model of Financial Early Warning Analysis Paper Part II: Early Warning Analysis of Enterprise Financial Crisis The complicated and changeable market environment and uncontrollable factors of internal operation determine the objective existence of risks. If enterprises can't effectively avoid risks, the crisis will breed and spread within enterprises. When all kinds of unforeseen risks occur, the financial system, as the center of enterprise capital movement, bears the brunt. The gradual deterioration of financial situation will lead to financial crisis, and when the crisis spreads to the unbearable limit of enterprises, it will lead to a full-scale crisis. Therefore, if enterprises establish a risk monitoring and early warning index system, diagnose crisis signals in advance and take corresponding measures, they can nip the crisis in the bud.

First, the basis of financial crisis early warning analysis

The construction and benign implementation of crisis early warning analysis system must be based on the following premises: 1. Universality of risk. That is to say, the transience and unpredictability of the enterprise's financial environment require the establishment of a precautionary risk awareness, which is the spiritual basis for the implementation of the system; 2. Differences in risks. Early warning signals are closely related to the decision-making and behavior of enterprises. The time, field and specific form of crisis signals of different enterprises are also very different. We must choose an appropriate early warning mode according to the characteristics of enterprises, identify early warning signals timely and effectively and control them. 3. The effectiveness of the risk. Effect is an internal mechanism of things themselves, and it is precisely because of the existence and function of effect mechanism that some form of behavior pattern and behavior trend will be triggered. In other words, we can spy out the signals before the crisis according to the prevention results and correlation of a series of events in the past, and at the same time trace back to the source to measure and estimate the future loss. When there is a potential crisis in an enterprise, it will inevitably have some influences, which may be manifested in one or more financial factors or in the overall operation. For example, the information of cash flow plays a very good role in forecasting the operating conditions of enterprises. 4. The root cause of risk management. That poor management is the root cause of the crisis. If there is no effective management system, some specific symptoms will usually appear and get worse gradually. At first, it may be manifested as improper allocation of resources, ignoring daily risk management and blindly expanding the market. Poor marketing and so on. When the financial situation is getting worse, it is obvious that the debt burden is heavy, the market sales are chaotic, and the cash flow, especially the operating cash flow, is insufficient. Therefore, whether an enterprise can seek competitive advantage and avoid falling into crisis depends on the level of operational efficiency, and its trend change becomes the most profound reason for the good or bad management performance.

Second, the financial crisis early warning analysis index system

In fact, the crisis of any enterprise usually goes through a process of gradual accumulation and transformation from germination to gradual deterioration. In the process. All kinds of crisis factors will be directly or indirectly reflected in the "barometer" of capital movement-the change of sensitive financial indicators. Therefore, by setting and observing the changes of sensitive financial indicators, we can predict crisis signals in time and establish a crisis early warning analysis system.

First, the characteristics of financial crisis early warning indicators

Because the early warning system is based on the analysis and prediction function of early warning information, this early warning information must have the following characteristics. 1. Highly sensitive. That is, once there are hidden risk factors, the subtle change of index value can directly reflect the change of risk; 2. Precursors. By revealing the precursors, we can identify and eliminate the crisis before it comes or breaks out. At the same time, it emphasizes the high timeliness of information, that is, the so-called "better late than never" truth. 3. The potential and performance of "bad news". Early warning information analysis is different from general information management, paying special attention to the "bad news" or "dark side" of enterprises. Usually, bad news will show the tension of enterprises earlier and more prominently.

Second, the financial crisis early warning indicators set

1. Univariate mode

That is, build a univariate financial ratio model to predict financial crisis. When several financial ratio trends involved in the enterprise model deteriorate, it is usually a harbinger of financial crisis. The root of the potential crisis, that is, the quality of management performance is ultimately reflected in financial results; The quality or reliability of the process that produces financial results directly affects the performance and economic consequences of the crisis; The continuous guarantee of the implementation process of financial results is mainly reflected in operational efficiency. Therefore, the specific indicators can be set in three aspects: the direct signal of potential crisis, that is, insufficient cash flow, the attenuation of process signal, that is, profitability, and the final signal, that is, low operating efficiency of enterprises.

L Direct performance signal-cash flow indicator

Risks generally have a certain lead time, and the change of cash flow is almost a "barometer" of enterprise income and risk status in the lead time. The cash flow began to deteriorate, which to some extent indicates the tense situation and possible crisis of cash operation in enterprises. Among them, the debt due is the greatest threat to the survival of enterprises, followed by some large daily expenses and capital expenditures, and the net operating cash flow is the ultimate source of enterprise wealth growth or getting rid of difficulties. The main indicators include:

The above ratio reveals the company's ability to pay due debts and current dividends with cash flow generated from operating activities, and also measures whether the company can pay its capital expenditure normally. Because if an enterprise wants to develop, it must not only be able to repay all debts, but also maintain its existing capital assets and necessary financial expenditures to enhance its overall competitiveness. The ratio of cash flow per share tracks the trajectory of cash flow in different periods and can be compared with earnings per share under accrual basis.

If the above warning indicators are often or permanently less than 1, enterprises must be alert to the potential crisis of insufficient cash payment. Refer to other precursor indicators, such as the ratio of non-cash cost to operating net cash flow, the ratio of operating net cash flow before interest and tax, and the contribution rate of operating net cash flow to debt repayment. At the same time, combined with industry comparison, forecast and analyze.

2 Process reliability signal-income index

Asset income is the source of enterprise cash flow. Only by expanding the market value-added ability through leading business can we really avoid the constant invasion of uncertainty crisis. Only dynamic and competitive enterprises can be highly sensitive to changes in business information. Among them, the profit of leading business and its proportion are the basis to determine whether the income of enterprises is stable and reliable. If the proportion of the sales rate or yield of the leading business to the total revenue shows a downward trend, it is often a dangerous sign of the unstable operation of the enterprise. At the same time, if the expected or existing income time distribution results are completely random or irregular, it also shows that the quality of this income is not really stable and reliable.

In order to evaluate the quality of income, it is necessary to find out the difference between sales income or sales profit and net profit and cash receipts and payments. If there is no big difference between sales profit, net profit and net cash flow generated by operation, it will show higher income quality. Otherwise, we must pay attention to the quality of income.

3. The basic guarantee of the final performance signal-operational efficiency index

An early warning analysis system should generally have two elements: leading indicators and trigger points. The leading indicator is a variable indicator, which is used to evaluate bad business at an early stage; The trigger point refers to the critical point that controls the leading indicators. Once the evaluation index exceeds the predetermined demarcation point, the early warning scheme should be started accordingly. As mentioned above, the maturity debt guarantee rate and the rate of return on leading business assets. The critical value of turnover rate of operating assets can be used as the trigger point of investigation. Therefore, when tracking and inspecting enterprises, we should pay special attention to the key points hidden in the changing trend of major ratios.

2. Variable model of financial crisis early warning analysis

It is often difficult for a single financial indicator to reveal the specific impact and timing of the crisis from the perspective of the whole enterprise. Therefore, it is necessary to comprehensively investigate the instability of the financial situation of enterprises more effectively and do a good job of avoiding or delaying the financial crisis as soon as possible, among which Edward Al and Altman's Z-score multivariable model is the most famous. Its indicators are based on liquidity, yield, stability and delivery ability. Five standard classifications of activity proportion. It has high accuracy in short-term forecasting, and is also called the corporate bankruptcy forecasting model. Enterprises can selectively increase or decrease indicators and gradually build specific multivariable models suitable for enterprises.

Although crisis warning is effective, it is dangerous to regard it as a panacea. At present, the financial early warning analysis system focuses on the statistics, screening and simple model calculation of enterprise financial data, but it is difficult to predict and monitor the potential financial crisis comprehensively with a simple quantitative model. The financial crisis early warning model should integrate multiple financial variables, otherwise its sensitivity, comprehensiveness and rigor will be questioned. But the more financial information involved, the more difficult it is to obtain, the longer the cycle, and the higher the cost. In addition, it is difficult to grasp the "degree" of exponential movement changes, that is, the warning line. At this time, it is necessary to combine some non-financial indicators or symptoms to accurately judge the destructiveness of the potential crisis, such as inaccurate financial forecast in a long period of time, excessive large-scale expansion, excessive dependence on loans, and failure to disclose accounting statements in time; In foreign countries, the key point analysis method and management scoring method are usually combined.

In fact, any time-sharing crisis early warning model can only provide analysts with clues about the possibility of financial crisis, but can not accurately judge whether financial crisis will occur, let alone replace operators to solve problems. Undoubtedly, it requires analysts to have a keen insight into the financial situation of enterprises, including the judgment and grasp of the overall macroeconomic trend. Enterprises should use various indicators directly or indirectly, simply or comprehensively according to their own industry or industry characteristics, and build a suitable forecasting model in long-term practice with the help of professionals and consulting companies' judgments on the current situation and prospects of enterprises, so as to find ways to resolve the crisis.