外文翻译---对企业财务风险的预警和控制

科技学院

毕业设计（英文翻译）

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：专业：班级：学生姓名：学号：指导教师：

On the corporate financial risk early warning and control

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 likelihood 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-flow 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.

Key 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 fallen 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 means 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 opportunity 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 through 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 activities of management, stakeholders, competitors, foreign governments, or weather. In today's 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 production 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 company's profit rate 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 company's profit rate on fund is 10% and the corresponding interest rate of company's loan or the interest rate of issued bond' face is 8%,the interest income of shareholders will be higher than 10%; if a company's 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 leverage resulting from company's 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 wide 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 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 manage to the financial risk contents before the disadvantageous risk just appeared or appeared, identify, with accurate held various financial