Corporate Financial Distress Early Warning Research

With the development of market economy in China, the importance of financial distress raised greatly.Currently the research of financial distress in our country is usually demonstrative and theoretical. Case analysis is barely employed. Consequently, few enterprises actually learned from these researches how to predict, recognize and resolve financial distress.This thesis is paralleled by a review of the theoretical studies of global financial distresses from the background, connotation, speculations and resolutions through case analysis. Taking XIAOYA ELECTRONICS Co., Ltd as an example, which is a typical state owned enterprise and is very representative in China, this thesis elaborates on the formation and solutions of its financial distress. By studying its general condition, market environment, competing situation and management strategy, especially its financial status, this thesis analyzed the payoff capability, assets structure, repay capability and cash flow, and ultimately the real financial status of the company. Referring to Mr. Li Bingcheng(李秉成) three-factors formation model of financial distress, the author established a 3-factors-to-4-stages model to analyze the cause, sign and development of XIAOYA ELECTRONICS. This model may help to setup the framework for resolving financial distresses at the individual corporation level. Finally this thesis made several suggestions of developing sound law system, building up the early-warning system and expanding the processing space of the finance distress.