Financial Risk Causes of Financial Risk Early Warning Model -- Based on Multiple Case Studies of Listed Pharmaceutical Companies

Abstract

Currently, the pharmaceutical industry is facing development bottlenecks, primarily due to the overall economic environment and various pharmaceutical policies, including R&D pressure, cash flow pressure, and regulatory pressure. Therefore, the financial risk prevention and control of pharmaceutical companies is particularly important. This paper analyzes the risk level of the case company by selecting the financial risk early warning model proposed by previous scholars and testing its accuracy. Through a comparative study of three companies in the industry and an analysis of indicators item by item, the risk factors causing problems for pharmaceutical companies are identified. The study finds that the risk causes of pharmaceutical companies are low gross profit margin, unclear R&D conversion efficiency, high short-term borrowings, low inventory turnover, high operating costs, low accounts receivable turnover, low accounts payable turnover, and a high proportion of long-term borrowings in total liabilities. In response to these issues, corresponding improvement suggestions are proposed. At the product level, pharmaceutical companies should focus on R&D investment targets, equity transfer, production management systems, and government policies; At the turnover level, their attention should be paid to asset-backed notes, product customers, sales market and other aspects; At the financing level, their attention should be paid to the object of equity sale, patent pledge and debt-equity swap. This paper aims to make up for the gap in the field of multi-model and industry internal comparative research, and provide some reference and suggestions for subsequent researchers in this field on the early warning, prevention, and control of financial risks of pharmaceutical companies.