Author(s)

Tingting Wang ¹, Wenyu Shi ²

Affiliation(s)

¹ School of Economics and Management, Northeast Petroleum University, Daqing, 163000, China
² School of Economics and Management, Changsha Normal University, Changsha, 410000, China

Corresponding Author

Tingting Wang

ABSTRACT

Given that China's desalination industry is still in its nascent stage of development, there exist overall small-scale operations, a deficiency in innovation capabilities, and other issues that result in increasingly severe financial risks. To achieve the sustainable and efficient development of the desalination industry, this paper conducts an in-depth investigation on how to effectively prevent the financial risks of the desalination industry. This paper selects Safbon Water Service and Shanghai Electric as the research subjects, employs traditional financial indicators to conduct a preliminary analysis of financial risk, and subsequently utilizes the Z-score model for in-depth research. The results reveal that both companies have a high financial risk. Based on this, this paper offers the control measures for the financial risk of the two companies from the perspectives of reducing financing risk, strengthening operational capacity, and mitigating revenue risk. The findings of the study fill the gap in the research on individual desalination enterprises and provide a certain theoretical foundation for the subsequent study of financial risk in the domestic desalination industry.

KEYWORDS

Z-score Model, Financial Risk, Desalination Industry

CITE THIS PAPER

Tingting Wang, Wenyu Shi, Financial Risk Analysis of the Desalination Industry Based on the Z-score Model—Take Safbon Water Service, Shanghai Electric Company as an Example. Financial Engineering and Risk Management (2024) Vol. 7: 113-122. DOI: http://dx.doi.org/10.23977/ferm.2024.070515.

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