Research on the Application of Entropy Method and Efficiency Coefficient Method in Financial Risk Early Warning of Enterprises

Taking Shandong Longda Meishi Co., Ltd. as an Example

Abstract

In the process of development, enterprises need to focus on two major issues, namely the increasingly fierce competition and the problems in the financial management of the enterprise. If you don't want the financial situation of the enterprise to deteriorate, you need to pay attention to the internal operation and management of the enterprise, because if there are problems in the internal financial management of the enterprise,it will lead to the change of the market environment and the lack of timely and accurate information, so as to make wrong decisions. Therefore,it is necessary to build a financial risk early warning model to reduce losses. Taking Shandong Longda Meishi Co., Ltd. as an example, this paper uses the entropy method and the efficacy coefficient method to construct a financial risk early warning model, and gives a risk early warning to the financial data of Shandong Longda Meishi Co., Ltd. from 2018 to 2022. The empirical results show that the early warning results are consistent with the actual situation of the enterprise, which proves that the early warning model built by this method is scientific and effective.