Research On Financial Distress Of K Machine Tool Manufacturing Company

Machine tool manufacturing industry as machine tools of China equipment manufacturing industry,the development quality of which has greatly affected the development of Chinese economy and the revitalization of our country.with the deepening of supply side structural reform and <Chinese manufacturing 2025> coming into the specific stage of implementation,2017 year is an important year for the implementation of the " 13 th Five-Year plan ",a series of supporting policies will introduce in the year.China’s machine tool industry will face new challenges and opportunities in the 2017.As a machine tool company which was specially treated in the industry,K company is in continued deficit of net profit in recent years.Under crisis of suspension of listing,K company has carried out active marketing strategies,encouraged innovations,performed R&D,reduced staffs and controlled the cost to expect to alleviate the current financial difficulties.In this paper,the current development of China’s machine tool industry is firstly introduced,and a general understanding of China’s machine tool industry was made through PEST analysis and competitiveness analysis.It is also made a brief introduction on machine tool products,production status,marketing situation and development status,and made an analysis on current situation of financial distress on Chinese machine tool industry on the aspects of financial benefit,solvency and operation ability.Secondly,taking K machine tool company as an example,it is found that the general trend of K company has some certain similarity with the industry but with more serious financial problems after analyzing the process and performance of financial distresses of the company,and further analyzed the external environment causes and internal governance causes of difficulties of K company.The strategic analysis,analysis on accounting and financial statements is made by using the SAS model in K company,and it studied out the strategies of resolving financial distress including the company strategies,the company’s business,the company investment and financing,internal control and risk management strategies.Finally,it concluded from example of K company that the financial and operating difficulties of machine tool manufacturing companies can be resolved and avoided by innovative product research and development,implementation of active marketing strategy and improvement of the industry capital utilization etc.,and to promote the development of Chinese machine tool manufacturing industry.Under the background of global economic downturn caused by the economic crisis,the machine tool industry of our country was in a slump due to the influence of market demand,price and inventory pressures,and many of machine tool companies had suffered heavy losses from cash flow problems under pressures of operation revenue and cost control.With current macroeconomic environment,K and other machine tool company have to improve the quality of assets,optimize the main business and adjust the development strategy in order to avoid the occurrence of financial distress and to grasp the opportunity of development.Therefore,the studies on the financial distress of machine tool manufacturing industry are very necessary.