Financial Risk Analysis of FAW Hongqi Automobile Company

Abstract

Amid intensifying market competition in China, the automotive manufacturing industry, as a capital-intensive pillar sector, harbors various financial risks throughout the entire operational process. Inadequate risk control may lead to capital chain rupture, profitability decline, and even operational crises. Based on the financial data of FAW Hongqi Automobile Company from 2019 to 2023, this paper employs literature review and financial indicator analysis to identify Hong qi's financial risks across three dimensions: financing, investment, and operations. Using quantitative metrics including current ratio, debt-to-asset ratio, asset turnover efficiency, and profitability indicators, this study identifies four core financial issues: significant short-term solvency pressure, weak period expense management, low returns on internal investment, and decelerating capital turnover. Accordingly, four control strategies are proposed: optimizing the structure of long-term and short-term debt, strictly controlling period expenses, improving investment feasibility assessments, and enhancing the efficiency of working capital turnover. This study provides a reference for the financial risk management of Hongqi and other domestic independent car brands.