Causes of Telecommunications Enterprises and prevention of financial risks

For enterprises, the existence of Financial Risk with the objectivity and universality, the coexistence of Financial Risk and business operations. The Financial Risk is a two-edged "sword", used properly, it can increase corporate profits, excess returns for shareholders; arrangement is defective, it will increase the loss of business, increasing costs of financial crisis, and even business failure. Thus, modern enterprises, in-depth analysis of the causes of Financial Risk and take effective measures to guard against Financial Risks, as an important subject.


First, the financial risk and its causes

1. The definition of financial risk
At present the concept of financial risk and to determine the scope of the consensus view is not given, there are two categories together the views of one typical financial activities of financial risk that the financial risk of the generalized. Second, the financial risks of debt financing, that is narrow on the financial risk. Some people think that too one-sided narrow view of financial risks, debt management companies for the effects of different growth stage and different, good for growth companies, debt management can take advantage of financial leverage, for enterprises bring more benefits; but for the end of the business in terms of growth, we must seriously consider the cost of debt management, debt ratio reasonable control, or else. The author's company - China Telecom Hainan company, is a large state-owned enterprises, competitive market, good business growth, induced during the financial activities of the enterprise risk of the enterprise will have a greater impact. This paper is a broad analysis of financial risk.

2. The type of financial risk
Combining the characteristics of the telecommunications industry, as well as the causes of financial risk, I believe that financial risk is divided into eight types:
(1) capital structure risk. Mainly refers to the high proportion of fixed assets, accounting for assets, asset-liability ratio is high, and weak capital mobility; (2) financial risk. Including financial security risk, interest rate risk, currency risk and liquidity risk, etc.; (3) cost structure risk. mainly refers to the depreciation of the proportion of total income is too high, the cost of space squeeze cash; (4) asset risk. including security risks and operational efficiency of asset risk (such as some operators, PHS, etc. atrophy caused by the traditional voice business risk and asset impairment idle risks), etc.; (5) investment decisions and control risk. such as investment direction, investment selection, investment unreasonable for the effective control of investment projects and follow-up analysis Evaluation and assessment; (6) Tax risk. such as tax policy, the level of understanding and implementation of the tax uncertain risks; (7) disclosure of accounting policies and risks. refers to the accounting system implementation, financial reporting risks and Information Information Distortion disclosure risk; (8) internal control risk. revise and improve the internal control system, including the possible risks and the possible implementation of internal control the rectification is not in place, the case of point defects.

3. Financial Risk Analysis
(1) capital structure is irrational, high proportion of fixed assets, liabilities, a large scale. The current increasingly competitive telecommunications industry, due to the characteristics of network economies of scale for the dominant position, to maintain a large fixed asset investment growing in operating costs case, only increase the liability scale. As the decline in profitability, the Hainan Telecom had to increase the proportion of short-term liabilities in order to solve temporary financial difficulties. While the effect of debt with tax deductible interest expense, income and other positive financial leverage effect, but debt ratio is high, especially short-term debt liabilities, the company will increase the pressure on liquidity, improve financial risk. (2) Enterprise not operating properly, poor liquidity. First, as national regulatory and investment risk considerations, primarily the financing of the telecommunications industry for network construction investment, the main source of debt the company focused on operating profit. In addition, the proportion of current assets in the stock gradually increased. inventory takes a lot of money, but also to pay the appropriate storage fees, long-term stock market value fell further resulting profits. (3) the macroeconomic environment of financial management complexity, lack of corporate response capabilities. corporate financial management complexity of the macroeconomic environment is the enterprise financial risk arising from external causes. macroeconomic environment of financial management of the complex. the financial management of the macro environment including the economic environment, legal environment, market environment, social and cultural factors such as environmental and resource environment. If the overall situation of national economy and industry boom, bank lending interest rates, the pressure of RMB appreciation, tax policy adjustments, continuing inflation, and so on, most of the weak foundation of financial management, resulting in a lack of financial management systems to adapt to changes in the external environment and the ability to cope with the resulting financial risk. reposted elsewhere in the Research Papers Download http://www.hi138.com II , enterprise financial risk prevention measures

1. Establish and improve financial risk management system
June 2006, the SASAC issued a <"Central Enterprise risk management Guidelines>>. Beginning in 2007, the author of the Corporation, in the whole group to promote comprehensive risk management, financial risk management is a comprehensive risk management an important part of gradually establish a financial risk management system. significant financial risks to enterprises can do early detection, early treatment and minimize risk.

2. Capital Structure Optimization and the combination of asset optimization
The merits of capital structure and corporate financial goals, financial risk are closely related. Capital structure optimization to a certain extent, reduce the financial risk. Enterprises must optimize the capital structure to be able to induce corporations to emphasize investment efficiency, reducing investment mistakes, the other , the effective investment and capital for the restructuring of enterprises to create a good premise. increase return on investment, can increase the cash stock, and improving operating margins and enhance their ability to resist financial risks. telecommunication companies through operation to optimize its asset structure of capital to improve its future net cash flows.

3. Improve the resilience of the financial management of the macroeconomic environment
With the liberalization of the telecommunications market operations, telecommunications, the financial management of the macro environment is increasingly complex. The face of ever-changing environment of financial management, enterprises should set up efficient financial management organization, to improve the professional quality of financial personnel, master enterprise risk management theory, able to accurately analyze the macro environment and its enterprises are facing change, and develop a variety of contingency measures to reduce the financial risk.

4. The use of appropriate techniques
Companies can use technology to prevent financial risks many ways, mainly the following: (1) dispersion, refers to the joint venture by enterprises, and foreign investment in a diversified way of diversification, risk diversification. (2) to avoid a method whereby financial enterprises in select programs, programs should be combined with evaluation of the possible financial risks, to achieve the objective of ensuring the premise of financial management, select the less risky options to achieve the objective of avoiding financial risks. (3) Transfer Method , an enterprise according to different financial risks, by some means of some or all of the financial risk transfer to the other person approach. (4) reduction method, the face of objective existence of an enterprise's financial risk, to take measures to reduce financial risk Methods. enterprises should be combined with their own characteristics, flexible use of the technology and methods to prevent financial risks.

Although the financial risk is an objective reality, inevitable, but companies should have a clear understanding of financial risk, and only effectively prevent financial risks, to make business healthy, stable and rapid development.


References:

[1] were to: <"Enterprise Financial Risk causes and preventive measures >>,<< 2006 Selected Papers of China's total outstanding Accountants>>
[2] Qun Chen Xia: <<On the connotation of Financial Risk and Prevention >>,<< CHIEF FINANCIAL>> 2009.06
[3] Wang Han: <<China's telecommunications operators, capital structure optimization >>,<< Tianjin University of Finance and Master of Proceedings>> 2009.05 Links http://www.hi138.com Research Papers Download