Analysis Of The "De-Leveraging" Path Selection And Effectiveness Of Fangda Special Steel Technology Company Limited

In the twelfth meeting of the Central Finance and Economics Leading Group in 2016,President Xi Jinping put forward the big task of "de-leveraging" in China’s supply-side structural reform.As an important part of China’s national economy,as an important pillar industry in China,private steel companies have become the most active economic growth point in the national economy.However,in recent years,in the face of chaotic and complicated economic situations at home and abroad,the living environment of private steel companies has become less and less optimistic.The growth rate of private enterprise debt in2018 has been much higher than the growth rate of assets,and the asset-liability ratio has begun to grow rapidly and gradually approach the average value of state-owned enterprises.Therefore,it is of great significance to study the path and effectiveness of "de-leveraging" of private steel companies.This article summarizes the importance of "de-leverage" of private steel enterprises in China and the impact of "high-leverage" factors and the reasons,methods and effects of "de-leveraging".Analysis is very necessary.This article takes Fangda Special Steel Technology Company Limited as a case company,adopts the literature method,case analysis method and factor analysis method to study the "de-leveraging" path taken in its business activities and its effects,provides other private steel companies Think and learn.First of all,this article elaborate the research background,significance,research status and research methods.Afterwards,it introduces the concept of leverage related to this article,introduces capital structure theory,risk management theory,cost habit theory,and prepares for the theoretical study later.A theoretical analysis of the "de-leveraging" path and effectiveness of an enterprise is carried out.The path is divided into a capital path,an asset path,an income path,and a profit path.It is believed that the effectiveness of the enterprise should be analyzed from the level of leverage,financial risk,and financial performance.This article takes Fangda Special Steel Technology Company Limited as the case object,and finds that the problems before its “de-leveraging” financial situation were irrational capital structure,poor asset allocation,low capital utilization efficiency,and excessive cost consumption.To deal with these problems,Fangda Special Steel Technology Company Limited“de-leveraging” path is briefly analyzed,and then the leverage ratio,financial risk level,and financial performance level of the company before and after “de-leveraging” are analyzed.It was found that Fangda Special Steel Technology Company Limited’s "de-leveraging" effect was remarkable,and the corporate leverage ratio decreased from 75.63% to 29.96%;the financial risk of the company was changed from the bankruptcy zone to the safe zone,and the company’s profitability,debt repayment ability and capital use efficiency were all improved;The company’s financial performance has been improved,and its financial status and operating results have been improved.Through factor analysis and data comparison,it isfound that the capital and asset factors are the main factors of the "de-leverage" of the enterprise,and the income and profit factors are the secondary factors of the "de-leverage" of the enterprise.It is concluded that the path selected by Fangda Special Steel Technology Company Limited for "de-leveraging" is mainly the capital path and asset path,supplemented by the necessary income path and profit path.Finally,it was concluded that Fangda Special Steel Technology Company Limited’s "de-leveraging" is based on capital and asset paths,has improved the company’s financing structure,transformed its financial situation well,and continuously reduced its financial risks.But at the same time,the financial performance in 2018 has a downward trend,and companies need to continue to maintain development.It also provides some suggestions for the current “de-leveraging” path of private steel companies: Increasing corporate equity financing,coordinating corporate asset allocation,digging out new models of corporate profitability,improving capital efficiency,reducing costs and increasing benefits.