| During the economic downturn,the deterioration of debt cancer triggered a series of complications that endangered the health of the market economy.In the face of the high risk of corporate fraud,the Chinese government has opened up a prescription for market-based debt-to-equity swaps.However,this is not the first time China’s debt-to-equity swaps have taken place.It is not a simple copy and paste of the first round of debt-to-equity conversion.If the relationship between doctors and patients is compared with two debt-to-equity swaps,the first round of debt-to-equity swaps is the government’s decision to pay a specialized doctor for the treatment of a designated patient.In this round of marketization of debt-to-equity swaps,the government fully respects the autonomy of doctors and patients,realizes the two-way choice of doctors and patients,does not impose interference with doctor-patient relationships,and does not come forward to pay “medical expenses”.Regardless of how the two forms of debt-to-equity swaps are different,the starting point of the government is to restore the health of "disease-ridden" companies.As a pillar industry in China,the iron and steel industry has always been the hardest hit area.Debt-to-equity swaps can be used as an auxiliary means to boost supply-side structural reforms and help companies to leverage effectively and steadily.Therefore,it is good news for iron and steel companies to convert debts into debts,and it is possible to grasp the opportunity to achieve a major turnaround.However,this "dealt" of debt-to-equity swaps is not free to use by any company.It is risky and needs to be alert to risks.This article takes Nanjing Iron & Steel Co.,Ltd.as the case study object and studies the financial impact of the debt-to-equity swap of Nanjing Steel through consulting literature and comparative analysis.Nanjing Iron & Steel Co.,Ltd.is among the first echelon in the steel industry and has become the first single private enterprise debt-to-equity swap,providing a reference sample for other private enterprises.In the introduction part,this article mainly summarizes the background,significance,content and methods of the research,and also describes the research status of domestic and foreign debt-equity swaps.Afterwards,the two theories related to debt-to-equity swap were elaborated in detail,and the theoretical basis was laid to answer the question of why debt-to-equity swaps would affect the company.Thenhe described the institutional background of this market-based debt-to-equity swap and mainly analyzed what factors affect debt financing to enterprises.In the case analysis section of the main body of the article,the basic situation of the company is paving the way.We first dig into the two dimensions of the general situation of the company and its causes of debt formation.One is the dimension of operating liabilities,and the other is the dimension of financial liabilities,breaking through one by one.Subsequently,the debt-for-equity swap program about motivation and the risk was carried out.Then,based on the management financial statement analysis system of Nanjing Iron & Steel Co.,Ltd.,the short-term and long-term directions were used to discuss the financial impact of debt-to-equity swaps on Nanjing Steel.Finally,on the basis of the results obtained from the analysis,a personal opinion on the deep improvement of the financial status of Nanjing Steel was proposed.By complementing the improved DuPont analysis and radar chart analysis,this paper concludes that the immediate effect of the debt-for-equity swap of Nanjing Steel is that the company’s leverage has been effectively controlled and the company has been pulled deeper into debt swamps.In the short term,debt-to-equity swaps have improved the capital structure of companies.However,the long-term counterattacks of companies depend on improving their profitability,while the improvement of profitability can be driven by innovations to achieve the dual-core business-steel industry and new industries. |
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