Application of Entropy Weight TOPSIS Method in Financial Risk Assessment of Liquor Listed Companies

Take Shanxi Fenjiu As an Example

Abstract

Taking 14 financial indicators of Shanxi Fenjiu from 2012 to 2022 as samples, this paper uses entropy weight TOPSIS method to establish a financial risk evaluation system from profitability, operating ability, debt paying ability and development ability, and makes a comprehensive evaluation on the financial risk status of Shanxi Fenjiu in recent 11 years. The results show that profitability and operating ability are the first-level indicators that have the greatest impact on financial risk. From the perspective of sub-divided second-level indicators, operating cost rate in profitability, inventory turnover rate in development ability, asset-liability ratio in debt repayment ability, and the proportion of total assets growth rate in development ability have the highest impact on the ranking results. The overall trend of financial risk of Shanxi Fenjiu in the past 11 years has shown "M" type fluctuations, and the recent risk level is relatively low. In order to effectively prevent risks, Shanxi Fenjiu should effectively control the sales expenses, balance the volume and price of products, improve the turnover efficiency, maintain the brand image, maintain the asset-liability ratio within a reasonable range, and strive to resolve the financial risks from the root, so as to enhance the financial value. The research results have certain reference significance for liquor listed companies to formulate reasonable financial management plan.