A Study On The Financial Distress Of Manufacturing Listed Companies

With structural change in the economy, China’s economic growth is slowing gradually, the development model from investment-driven to innovation- driven. With the transformation of economic development model, the costs of labor and production have increased by a big margin. The model use to rely on consumption of resources and damage the environment in exchange is unsustainable. Nowadays, the core of China new competitive advantages is the manufacturing.China is a manufacturing country, and also is a brank weak: low-level repeated construction, low capability of independent innovation and other issues still outstanding. Manufacturing industry profits continued to decline. Besides, the global manufacturing, for example, U. S. and Germany, after the financial crisis, are back to manufacturing revival strategy; the emerging economies, for example, India and Thailand, also take full advantage of low labor costs in order to promote the development of manufacturing. Therefore, the study on financial distress of listed manufacturing companies is meaningful.Based on the summary of foreign and domestic research literatures, we found that due to the bankruptcy of the company and capital market restrictions in China, bankruptcy is not included in the standards of financial distress, and it always combined with deterioration of financial indicators. In theory, this paper argues that financial distress affected by supply and demand, industry cycles, government intervention, corporate governance and other effects. Subsequently, the paper analyzed the actuality of financial distress in listed manufacturing companies, includes industry distribution, characteristics, causes, present situation and countermeasure, we found that financial distress of listed manufacturing companies tend to choose the asset restructuring measures to save themselves.The paper select an instrument manufacturing company as research object, respectively from financial ratio and financial report for analysis. The company which occurred financial distress usually accompanied by deterioration of financial index. Through analysis, the paper find out cause of the financial distress: corporate governance arrangements are not reasonable; significant deficiencies in internal control; capital chain, etc. The reasons discussed earlier, are the internal reason of the financial distress; and the decline in market demand; increased competition; impact at policy level are the external causes of the financial distress.This paper propose countermeasures to address financial distress in the sixth chapter. To Phoenix Optical, the paper put forward three proposals: to build the core business and core competitiveness, achieved business diversification; improving the corporate governance structure, strictly implementing provisions of the internal control systems; actively seeking asset restructuring and resource integration. And then, the paper get inspiration in manufacturing industry, the industry can speed up technical innovation to achieve upgrading of the industry as a whole, changing out of business and operating models, etc.Finally, it comes to the conclusion of this paper: financial distress is worsening, is often accompanied by deterioration of financial characteristics; financial distress is caused by external and internal factors, but the internal factors are the main causes. Through product innovation, changing business models, actively using the capital market to asset restructuring and other means can work out the financial distress. This article also raised the prospects for future research.