The Case Study On The Financial Crisis Of LeTV

In recent years,the Internet industry has developed rapidly.With the continuous progress of high-tech information technology,the online video industry in China also undergoes high-speed growth and the user scale keeps expanding.Up to now,the number of the users has reached 100 million.As the first online video website to be listed in the A-share market with an IPO qualification as well as the first video website enterprise to be listed in the world,LeTV has led the Internet industry with its unique ecological mode of "platform,content,terminal and application" after succeeding in the peer competition.However,nothing good lasts forever.In November 2016,a serious financial crisis broke out in the LeTV due to the fund chain breakage and huge losses.Since then the company has declined dramatically,making people sigh.As a representative enterprise with rapid rise and rapid decline,it is particularly important to study the performance of its financial crisis,analyze the causes of its financial crisis and find corresponding preventive measures to provide experience for other enterprises in the same industry.Therefore,with LeTV being the target case and on the premise of the all-round understanding of its strategic layout,the paper studies the detailed performance form of its financial crisis,makes an analysis and evaluation of every financial indicator as well as explores the reasons for its financial crisis in an aim to help benefit the healthy development of other peer enterprises.The paper firstly analyzes the financial indicators of the LeTV based on the Financial Crisis Theory.It can be seen that the LeTV had a poor profitability in fact.However,it had an ambition to expand business scope in the case of insufficient funds.A series of crazy expansion gave rise to massive debts that couldn't be paid back in time,which eventually resulted in the severe financial crisis.Secondly,it analyzes the causes of the financial crisis from the aspects such as profitability,investment scale,industry competition,management mechanism,connected transactions and risk management awareness.Finally it provides the other peer enterprises with the implications with an eye to the causes of the financial crisis in LeTV and from the perspective of preventing financial crisis.That is,the company should not only establish a mature and sound mechanism for risk management and prevent the occurrence of the financial crisis,but should also pay attention to strengthening the solid foundation in the process of business growth,enhancing core competitiveness,selecting reasonable financing channels,optimizing the assets structure,and avoiding blind expansion by all means.In terms of management,the decision-making mechanism of the Board should be improved to protect the developmental strategy formulated by the company.The paper has been conceived by focusing on heated social events in recent years.LeTV event,as a hot event,is often mentioned today.At present,most of the theoretical and practical researches on the LeTV are concerned with the developmental strategy,internal control,profit model and equity structure.There are few studies on the performance and causes of the company's financial crisis,therefore it is innovative to some extent.In addition,it is of practical significance to provide other enterprises in the same industry with inspirations and implications to cope with the financial crisis via the case study of that in the LeTV company.