A Study On Financial Distress Of *ST Yedao

Nowadays,China’s aging population degree is deepened and sub-health groups are increasing.People pay more and more attention to the quality of life,and the awareness of health is also strengthening.Health wine has a broad space for development because of its health properties.The health wine industry has developed rapidly in recent years.Compared with the overall growth rate of alcoholic products,health wine has maintained a high growth rate of 30%.In 2017,the scale of China’s health wine market has exceeded 20 billion yuan.It is expected to grow to 50 billion yuan in five years.*ST Yedao was the first company listed in the health wine industry and was quite famous.In the early 21st century,it quickly developed into the industry leader,and its revenue in 2004 reached 1.3 billion yuan.But when the health wine industry is developing well,it is getting worse and worse.With the capital advantage of listed companies,*ST Yedao has not only been overtaken by competitors such as Jinjiu,but has even fallen into financial distress.Because of the loss of net profit in 2016and 2017,the company’s stock abbreviation adds“*ST”and faces the risk of delisting.ST is the abbreviation of Special Treatment.Since 1998,listed companies that are in financial distress have been specially treated,and the stock abbreviation is added with"ST"or"*ST".With the increasing number of ST listed companies,the study of the causes and countermeasures of the financial distress has become a common concern of scholars at home and abroad.Through the combing of the literature on financial distress of scholars at home and abroad,this paper summarizes the definition standards,characteristics,causes and countermeasures of financial distress.This paper is based on the*ST Yedao,which is in financial distress.Using the company’s 2013-2017 annual report data,through the analysis of financial statements,financial ratio analysis,and horizontal comparative analysis with companies in the same industry,this paper found the problems of*ST Yedao.They include:heavy debt burden,negative growth in operating profit,insufficient cash flow,a decline in gross profit margin,and an internal control report issued by the firm with negative opinion.Analyze the causes by studying the*ST Yedao’s financial distress.External factors include macroeconomic cyclical fluctuations,institutional and industrial competition,and high fluctuations in raw material prices.External factors are uncontrollable for the company,and internal factors are the main reason for the company’s financial distress.Internal factors of the company include product quality problems,blind diversification of the company’s business,improper control of expenses during the period,unreasonable capital structure,invalid internal control,lack of talents,and huge losses in the holding companies and joint stock company.In view of the above-mentioned causes,this paper proposes solutions to highlight the main business,optimize capital structure,strengthen fund management,improve staff training,increase talents,improve internal control management system,improve control over holding companies and joint stock company,and establish financial distress early-warning mechanism.Only by continuously strengthening its management can the company resist the pressure from the external environment.This paper systematically analyzes the performance,causes and countermeasures of*ST Yedao’s financial distress.It hopes to help the company out of financial distress,and hopes to provide reference for other companies facing similar problems to avoid financial distress.