A Case Study On The Financial Crisis Of JG Company

In recent years,the scale of China's non-ferrous metal industry has grown rapidly.Thanks to the improvement of technical level,the production capacity has been greatly improved.However,the growth rate of demand is limited.So,the competition among enterprises in the industry is fierce.In addition,with the concept of environmental protection deeply rooted in people's hearts,all regions put forward higher requirements for environmental protection work,while small and medium-sized mining enterprises are short of funds,they have imperfect technology and limited investment in environmental protection.At this time,some small and medium-sized mining enterprises will choose to withdraw from the market,which provides opportunities for companies willing to purchase.In this context,JG company builds the whole industrial chain development strategy,completes the upstream layout through the acquisition of mines,and locks in low-cost,high-quality and sufficient resources.In the downstream,it extends to the deep processing field and builds silver products retail stores.Layout of the whole industrial chain process will bring a lot of uncertainty to the enterprise,requiring a large amount of cash flow,which will bring greater financial risk to the enterprise.If there are still problems in the capital structure and internal control of the enterprise itself,the enterprise will be exposed to huge risks,which will make the enterprise fall into financial crisis.JG company is in this situation.In 2018,JG company fell into a liquidity crisis.In addition,JG company was also faced with such crisis events as revenue scale decline,huge profit loss,illegal guarantee due to lack of internal control and fund shortage,non-standard annual report caused by internal control defects,non-operational occupation of funds by major shareholders,the stock of JG company gets special treatment,bond default and so on.Since the crisis,JG company has frequently received Shenzhen Stock Exchange Letter and postponed replies for many times.Therefore,in the case of JG company's financial crisis,it is worth studying to summarize the prevention and control methods of financial crisis from the perspectives of development strategy,internal control and corporate governance.First of all,through the collection and collation of literature on financial crisis,we have a full understanding of the concept and performance of financial crisis.Then this paper introduces the basic situation of JG company in recent years,such as the operating revenue,the whole industry chain strategy and the issuance of bonds.To analyze the specific performance of JG company's financial crisis,this paper sorts out the landmark events of financial crisis,and uses Z-score Model to calculate the Z-value of each year to show the continuous deterioration of financial situation.In addition,the occurrence of six major crises is also used to illustrate the financial crisis.In order to analyze the causes of financial crisis,this paper analyzes the problems of JG company from six aspects: macroeconomic and industrial policies,financial expenses,industrial chain extension,internal control,risk early warning mechanism and corporate governance,and analyzes how these problems cause financial crisis.Finally,based on the above analysis,the paper puts forward suggestions for JG company to deal with the financial crisis: the company's production and investment activities should closely follow the macroeconomic and industrial policies.In the short term,the company needs to implement restructuring.In the long term,in order to achieve stable development in the future,the company should rationally implement the extension of the industry chain,strengthen internal control management,establish financial risk early warning mechanism,and improve corporate governance.The enlightenment for other enterprises includes reasonable arrangement of capital structure and positive growth of net cash flow to ensure the sustainable and healthy development of the company.