Research on Financial Risk Evaluation of Listed Companies in China's Steel Industry

Abstract

To effectively identify the financial risk levels in the steel industry, this paper employs factor analysis to study the main financial indicators of 48 listed steel enterprises on the Shanghai and Shenzhen stock exchanges in 2022. After data standardization, five critical factors were extracted: profitability and growth factor, solvency factor, operational efficiency factor, profitability-cash factor, and operational-cash factor. These factors collectively provide a comprehensive assessment of enterprise financial risk. The analysis reveals significant differences in financial risk among enterprises. Companies with strong solvency and effective cash flow management exhibited lower financial risks, while enterprises suffering from poor operational efficiency and inadequate profitability faced higher risks. Consequently, the study concludes that steel enterprises should optimize debt structures, enhance operational management, and accelerate industrial transformation and upgrading to improve financial security and sustainable competitiveness.