Research on the Financial Risk Of Iron and Steel Industry Based on the Factor Analysis Model

This paper examines the financial risk of China's iron and steel industry. Based on the risk theory in financing, investment and operation, this paper constructs a financial risk assessment model, which involves five aspects: solvency, profitability, operation ability, growth ability and cash flow. Further, using the factor analysis method, the author finds that there exists unreasonable capital structure, imperfect cost management system and poor cash flow situation in iron and steel industry, all of which are contribute to the causes of financial risk of our sample firms. These results are expected to provide help for the financial management in iron and steel enterprises in China.