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Abstract: Financial risk in international capital flow refers to the objective possibility of capital loss in a specific environment and period. To sum up, it is divided into two parts: first, national risk, mainly including sovereign risk and political risk; Second, economic and management risks (or commercial risks), mainly including natural risks, foreign exchange risks, interest rate risks, profit risks, tax risks, enterprise management risks and other risks including inflation.
Keywords: accounting standards; Cash flow statement; financial risk
The financial risk in international capital flow refers to the objective possibility of capital loss in a specific environment and period. To sum up, it is divided into two parts: first, national risk, mainly including sovereign risk and political risk; Second, economic and management risks (or commercial risks), mainly including natural risks, foreign exchange risks, interest rate risks, profit risks, tax risks, enterprise management risks and other risks including inflation.
I. Interest rate risk and its prevention
Interest rate risk refers to the risk that interest rate changes caused by different types of uncertain factors directly or indirectly lead to the loss of investment value or income.
(A) treasury bill rate risk and its prevention. National debt (also known as non-default bond) is issued by the state, and there is no problem of bankruptcy and non-performance. However, national debt also has interest rate risk. The change of market value (present value) of national debt is inversely proportional to the change of market interest rate, and the longer the term, the greater the interest rate risk of national debt. Therefore, the bond price fluctuates with the fluctuation of market interest rate, which actually reflects the existence of interest rate risk. On the surface, it seems that investing in short-term bonds can avoid or reduce this interest rate risk, but it must be noted that investing in short-term bonds will also bear another interest rate risk, namely "coupon rate risk". Because when investors buy short-term bonds, they must also buy various coupons related to these bonds. Changes in market interest rates have an impact on bond prices and coupon rates, so interest rate risks still exist. Therefore, investors should choose according to the actual situation. For funds with no special purpose for a certain period of time, you can invest in bonds with an appropriate period of time; Funds needed in the near future can be invested in short-term bonds.
(B) corporate bond interest rate risk and prevention. Corporate bonds also have two kinds of interest rate risks: coupon rate risk and price change risk. Corporate bonds tend to have higher interest rates than national debt to adapt to their greater risks. The price of corporate bonds changes in the opposite direction to the market interest rate. In general, the credit rating of bonds is a direct factor affecting the price of bonds. Therefore, when buying corporate bonds, investors should first understand the credit rating of bonds, especially the credit rating of newly issued bonds, otherwise they will encounter risks, from reducing profits to bankruptcy. In addition, investors must weigh the return and risk. For the maturity date of bonds, investors should try their best to make the maturity date of the bonds they invest coincide with the payment date of cash. Although securities can be discounted before maturity, the discount rate is always higher than the rate of return, that is, the interest rate, which will make the discounter (that is, the investor) suffer losses.
(3) The risk of the company's stock interest rate and its prevention. Company stocks include preferred stock and common stock, both of which are risky. Except for the fixed amount and time of cumulative cash dividend payment for preferred stocks with cumulative dividend rights, most other non-cumulative preferred stocks may not pay cash dividends when the issuing company encounters economic difficulties; For the cash dividend of common stock, if the company thinks that the profit situation is uncertain, or paying dividends will bring serious economic difficulties to the company, it can also cancel paying dividends of common stock. Therefore, the risk of dividend income of common stock is greater than the coupon income of bonds. The influence of interest rate risk on preferred stock and common stock is generally reflected from the stock price through the present value mechanism. When investors invest in stocks, on the one hand, they should look at the production and operation conditions of the invested enterprises, and on the other hand, they should compare and analyze the coupon rate of the invested stocks with the market interest rate, so as to know fairly well.
Second, the profit risk and prevention
(A) the risk of profit distribution and prevention. Usually, before establishing joint ventures with foreign countries, a clear profit distribution clause should be signed. However, if the government or policy of the country changes and new policies are formulated, foreign investors can only occupy a small proportion in the joint venture, which will undoubtedly be a sudden blow to those foreign investors who originally occupied a large proportion (such as more than 50%), and as a result, the profit distribution will be directly affected. In addition, although some countries do not change the proportion of investment in this arbitrary way, they also stipulate that the proportion of foreign investment must be gradually reduced in a certain period of time. In addition to these two ways, there are also agreed ways for foreign investors to gradually reduce their shareholding. Then, in the initial stage of operation, investors should try their best to use various ways to speed up capital turnover in order to obtain more profits, so that even if the shareholding ratio gradually decreases in the future, the original intention of investment can be achieved.
(2) The risk of tax increase on investment profits and its prevention. Increasing taxes on the profits of foreign investors will undoubtedly directly reduce their profit income. Among them, withholding tax is typical, which refers to the taxes and fees levied by the host government on royalties or interest paid to foreign investors, such as dividends, trademarks, patents and technologies. For example, an American multinational company can only allocate 70% of its trademark rights in Italy to the American parent company, and the remaining 30% will be paid to the Italian government in the form of tax deduction. Therefore, when making investment decisions, we should consider investing capital in countries that do not levy such special taxes. If this special tax is suddenly levied, unless it is particularly profitable to invest in this country, you can consider gradually transferring capital outward until you withdraw. In addition, international tax avoidance can also be adopted.
(3) The risk of profit remittance and its prevention. The typical risk of profit remittance is foreign exchange management, which can be divided into loose foreign exchange management and strict foreign exchange control. For example, developed countries generally require that when sending money abroad, if the amount exceeds a certain limit, it must be reported to the banking department. This is a formal foreign exchange control and a loose foreign exchange management; However, some developing countries stipulate that the amount of investment remitted abroad each year should not exceed a certain proportion of investment profits, and it must be approved by the competent authorities of the host country. This is strict foreign exchange control, and it is this control that is the actual factor that affects the interests of foreign investors. For loose foreign exchange management, foreign investors can transfer profits by supporting the joining fee and labor fee and repaying debts. For those countries that adopt strict foreign exchange control, the investment profits of foreign investors cannot be freely remitted abroad. Investors can buy some assets or local government bonds that will appreciate in a short period of time, or deposit them in banks or lend them to other companies to maintain and increase their value and gain income. You can also transfer the price and remit the profits you earn back to China. Foreign investors can also adopt the method of opening up new export business in the host country, which can not only help the host country solve the problem of foreign exchange shortage, but also provide a new way for the transfer of funds.
(4) Risk of interest rate change and its prevention. When the market interest rate rises, the financing cost of enterprises increases accordingly, which may lead to the decline of operating efficiency and profits, thus making investors bear the risk of falling returns. In this case, the best way is to reduce financing to prevent risks. If it is because of the urgent need for funds for the expansion of production and business activities, other financing methods can be considered, such as converting the retained earnings of enterprises into capital. Of course, there are too many retained earnings, and you may have to pay a high retained earnings tax. Then, enterprises have to choose between interest rate and retained earnings tax.
Third, tax risks and prevention
International capital will encounter tax types, tax burden levels, tax preferences and some unexpected factors that have an impact on taxation. Therefore, we should fully understand the tax burden in capital flow in advance, predict the possible changes of tax policy as accurately as possible, and take various appropriate measures in time on this basis to minimize the tax burden in capital flow within the scope permitted by law. At the same time, effective measures should be taken to resolve the risks brought by mutation factors.
(1) Take advantage of the differences of tax systems in different countries to solve the problem of high tax burden. Carefully study the tax systems of various countries. According to the characteristics of China's tax revenue, formulate measures to reduce the tax burden. For example, in terms of income tax, the tax rates of various countries are generally around 50%, and there is not much difference. However, in terms of retained earnings and dividend distribution, countries have different practices. For example, in Germany and Japan, the tax rate of retained earnings of enterprises is 56%, while the tax rate of dividends and bonuses distributed to shareholders is 36%. When the production scale expands and additional working capital is needed, the retained earnings are not converted into capital, but borrowed from outside. The advantages of this are: first, it can avoid paying higher retained earnings tax; Second, loan interest can be deducted as cost or expense when calculating taxable income, thus reducing the income tax burden of the company.
Published in the China newspaper.
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(2) Strive for preferential tax credit policies of the domestic government. In the international capital flow, a part of capital flows into countries that aim to attract foreign capital and advanced foreign technology and management experience to accelerate their own economic development, and these capitals enjoy preferential income tax (or income) reduction to a certain extent and for a certain period of time. However, the implementation of this fiscal and taxation policy that affects international capital flows must be based on the premise of strengthening international tax cooperation between the countries concerned, that is, the host government will come forward and ask the tax authorities in the investor's home country to treat this part of tax concessions as if they have been paid to the host government and give preferential credits.
(3) adopt the transfer price strategy to reduce the tax burden. The general practice is: when subsidiaries of high-tax countries sell goods, provide services and technologies to subsidiaries of low-tax countries, they adopt the strategy of reducing transfer prices, so that the procurement costs of subsidiaries of low-tax countries are reduced, profits are increased and tax burdens are relatively reduced; On the other hand, when the subsidiaries of low-tax countries sell goods and provide services and technology to the subsidiaries of high-tax countries, the strategy of raising transfer prices also plays a role in increasing profits and reducing tax burden.
(d) Preventing sudden changes in tax policies. In order to attract funds, some small and medium-sized countries often give foreign investors preferential tax conditions within a certain scope and period. However, due to the instability of the government, the preferential tax conditions promised by the government may be cancelled and abolished after the change of regime. In this case, the most sensible thing for foreign investors is to increase expenses and reduce profits. They usually adopt accelerated depreciation or import raw materials, semi-finished products and spare parts from subsidiaries in other countries at high prices, so as to avoid the tax burden caused by tax policy changes as much as possible.
(5) Study the tax base range and tax rate differences among countries to determine the capital flow. Accurately defining the tax base range is the premise of determining the tax standard and calculating the tax payable. Countries differ greatly in the scope of taxation for specific tax recipients. Especially in the calculation of taxable income, there are great differences in the provisions of the items and their amounts that are allowed to be deducted as expenses in various countries, which are directly related to the size of the tax base, thus determining the tax burden of foreign investors. Before investing in this country, investors should carefully study each other's relevant tax laws, accounting regulations and accounting systems, and compare them with those of other countries, so as to have a clear idea. As far as the differences in tax rates are concerned, some countries adopt proportional tax rates, some countries implement progressive tax rates, and some countries may levy them at fixed tax rates (or "fixed tax rates"). Few two countries have the same tax rate structure. When making investment decisions, foreign investors should study and compare the tax structure and tax rate of the host country in order to determine the investment behavior and the mode of production and operation activities.
Four. Solvency risk
We can select relevant indicators from the cash flow statement to judge the debt risk of enterprises.
(1) cash ratio, that is, the ratio of the cash amount at the end of the year to the current liabilities of the enterprise, is used to judge the debt risk of the enterprise. Due to the short term of current liabilities (less than one year), it will soon need to be repaid in cash. If the enterprise does not have a certain cash reserve, it is easy to have problems when the debt expires.
(2) Net operating cash ratio, that is, the ratio of net cash flow generated by business activities of enterprises to current liabilities of enterprises. Why use the net cash flow generated by operating activities? First of all, under normal production and operation conditions, the cash income obtained in the current period must first meet the expenses of production and operation activities, and then meet the expenses of debt repayment. Second, the business activities of enterprises are the main activities of enterprises and the main source of their own funds. It should be said that it is also the safest and most standardized way to obtain cash flow. The debt risk of an enterprise can be measured by the ratio of net cash flow generated from operating activities to current liabilities, which can reflect the solvency of the enterprise from one side.
(3) The ratio of net operating cash to total liabilities is used to measure the ability of an enterprise to pay off all its liabilities with the annual net cash flow generated from operating activities, which can comprehensively reflect the risk of the enterprise's debt situation. By comparing the cash ratios of 30 enterprises in a certain system, we find that the enterprises with cash ratios between 40% and 80% are all enterprises with stable operation and good capital operation, and the cash ratio is above 65,438+000%. Some enterprises have special operating conditions, and some have increased their cash balance at the end of the year for some reasons. Although their capital is in good condition, the excessive cash ratio will make the assets stay in the cash with the lowest profitability, even though the enterprise has no risk of debt. Enterprises with cash ratio below 20% have various problems in their operation, among which cash shortage is the same feature, and several of them have extremely difficult cash flow and huge debt risk. Through this analysis, we can get the early warning signal of debt risk: when the cash ratio is lower than 30%, the debt risk of enterprises will increase, and at this time, it should be highly valued by enterprise managers.