Research On The Causes And Countermeasures Of Financial Distress Of Zhengzhou Sino-Crystal Diamond Company

In the face of the changing capital market environment,enterprises will also face more risks while obtaining development opportunities.Because of the faulty operation and mismanagement,the financial distress of corporates emerge frequently.When the company is in financial distress,it may suffer serious losses or face capital turnover difficulties,or even insolvent to lead to bankruptcy.Analyze the root causes of the company’s financial distress and put forward targeted suggestions to make the troubled enterprises get out of the financial distress as soon as possible,and also help the enterprises in the same industry to prevent and control related financial risks and reduce the possibility of financial difficulties.As China’s strategic emerging products and new material segmentation industry,its industry scale output accounts for more than 90% of the world’s total output.As one of leader in the industry,Zhengzhou Sino-Crystal Diamond has become the first artificial diamond enterprise forced to delist due to three consecutive years of performance losses.Its development process has played a warning role for the enterprises in China’s artificial diamond industry.Therefore,the choice of Zhengzhou Sino-Crystal Diamond as the research object has a certain representativeness.This paper selects Zhengzhou Sino-Crystal Diamond as the research object,with capital structure theory,internal control theory,principal-agent theory and cash flow theory,based on the use of literature analysis model analysis and quantitative analysis of the diamond from one of the troika to load of debt,because involving many lawsuits,the company multiple bank accounts of funds and holding subsidiaries and equity company equity is frozen,lead to company capital chain tension,combing the process of financial distress.This paper mainly from the definition of financial distress,the causes of financial distress and the three angles,the basic content is divided into three parts: first by Zhengzhou Sino-Crystal Diamond financial condition and operating situation to judge its financial distress,and through Z-Score model and F score model to quantify its financial distress degree,combined with the Z value and F value trend combined with its performance,confirm the accuracy of the judgment.Secondly,from the internal and external two aspects to analyze the causes of its financial distress,cause financial distress of the internal reasons for the main controlling shareholder interests occupation,violations of joint compensation and enterprise internal control failure,the external reasons mainly because of the macroeconomic environment change and competition environment changes cause competition in the industry.Finally,for these reasons for Zhengzhou Sino-Crystal Diamond optimization management strategy to improve the core competitiveness,seek merger,acquisition and reorganization to ease debt pressure and reshape the corporate governance and internal control body these countermeasures to alleviate and improve the current financial distress,also expect to other companies to inspire and reference,to prevent similar companies again in a similar crisis.