Research On Capital Chain Risk Of TH Real Estate Group

The capital chain is the cash flow in the course of operation of business and is the process of capital circulation. Since the real estate enterprise belongs to capital-intensive industry, it is extremely important for a company maintaining normal management to have sufficient money and free circulation of capital.Meanwhile, the industry characteristics of large investment, high leverage as well as long cycle of the capital chain risk, has become one of the main risks of real estate enterprises. In recent years, the government has issued a series of policies concerning credit limit and limited purchase, as a result, the real estate market is not prosperous as it used to be. In light of the increasing difficulty of financing, the slow circulation of cash, and the drop in sales, the real estate enterprises face huge financial pressure, increasing risk of capital chain rupture.The real estate industry, as a pillar of the national economy, is relevant to most industries in China. Once the capital chain ruptures, not only the real estate industry will face a high risk of operation, but there may be damages to the interests of investors,the credit institutions and the creditors, which may even affect the macro economy. Therefore, It is urgent in such situation that how to analyze the risks of enterprises to which the uncertainty factors brings and how to put forward proposals and suggestions concerning the risk of capital chain.This dissertation consists of five chapters.The first chapter analyzes the background and significance of the present research on capital chain risk, and integrate and analyze the results of domestic and international results of research on capital chain risk. In the latter part of this chapter, the main contents, research methods, thesis framework, as well as innovation of this dissertation are stated respectively.The following chapter defines the capital chain in real estate enterprises and conducts a clarification of the risks of capital chain, with concept of capital chain as departure of analysis. Meanwhile, Cash holdings motivation theory, Pecking order theory, trade-off theory and Agency theory are summarized, which lays the theoretical foundation for the case study. The basic situation of TH real estate group and its financial status are introduced in the third chapter, use Z-Score model combined with the amended criteria for funding them risk prediction, and then the author, from three stages of financial activities, analyzes the status quo and potential risk of capital chain respectively, and make a conclusion of the reasons of capital chain risk in TH Real Estate Group through the analysis at length finally.In the fourth chapter, based on the analysis of the case, the author proposes five suggestions to improve the management of capital chain risk. The last chapter is research summary and demonstrates the research insufficiency and the prospects for future research.Against the background that the overall real estate industry has been unprosperous, TH Real Estate Group receives much attention for its adhering high-level operation mode and purchasing land. This dissertation aims to reveal the potential risk underlying its radical expansion strategy by virtue of detailed case study of TH Real Estate Group, and as a result, it can provide experience for the other enterprises in real estate industry improving management of capital chain risk and formulating reasonable development strategy.