Analysis of Enterprise Financial Risk Early Warning Model Based on the Evidence Theory and Whitening Weight Function

Abstract

Enterprise financial risk refers to the uncertainty of financial status caused by various internal and external factors during investment, financing, operations, and other activities, which may result in losses for the enterprise. Agricultural group enterprises engage in diversified businesses and have a large number of transactions. Characteristics such as natural disasters, financing difficulties, and strong seasonality of income and expenditure make agricultural enterprises face greater financial risks. Based on the perspective of evidence fusion, this paper takes the JS Agricultural Reclamation Group as the research object, puts forward a financial risk early warning model based on evidence theory, and innovatively puts forward the basic probability assignment of evidence obtained by whitening weight function, and uses evidence theory to fuse uncertain risk information. This paper makes an empirical study of 420 subsidiaries of the group and selects 10 subsidiaries as case study objects. The results show that the model proposed in this study can improve the prediction accuracy of the group’s intelligent financial decision system and the existing literature and reduce the subjective factors and information loss in the risk assessment process. In addition, this study provides the probability interval of early warning results, which can expose small probability risks and provide a more reliable basis for regulators, enterprise managers, and investors to make efficient and correct decisions.