The Research On The Financial Crisis Of LeTV Under The Background Of Diversified Operation

Under the tide of economic globalization,the development mode of enterprises is evolving constantly.Many enterprises are not satisfied with carrying out a single type of production.Instead,they seek diversified and multi-dimensional development of enterprises by means of newly establishment and merger.They also implement diversified development strategies in order to achieve the purpose of spreading management risks,striving for synergy and making full use of enterprise resources.In recent years,Internet companies have accelerated the pace of diversified expansion,they are committed to creating their own ecosphere for long-term development and meeting consumer demand fully.However,the successful implementation of diversification strategy needs to be based on a stable capital chain.Once the expansion speed is too fast and there is not enough internal and external financing support,enterprises will fall into financial crisis.As the first Internet video company listed on the IPO in China,LeTV began to plunge into financial crisis from 2016 because of diversified management,attracting much attention.Based on the enterprise survival factor theory,enterprise boundary theory and principal-agent theory,this paper analyzes the financial situation of LeTV from four aspects:asset scale and structure,debt scale and solvency,profit status and cash flow,and uses Z-Score model to evaluate its financial situation.Based on the above analysis.this paper holds that the financial crisis of LeTV is mainly due to the rapid pace of LeTV’s diversified expansion in recent years,the ecological entrance in the diversified ecological model is difficult to achieve,and the lack of core competitiveness of the main business under the irrational business model,unable to provide sufficient internal financing for the expansion of the sector,while externa financing risk is too large,and the "single dominant" governance structure also brings many agency problems to enterprises.On the basis of combing financial crisis.this paper puts forward some countermeasures to resolve the crisis,such as defining the enterprise boundary,deepening the core competitiveness,strengthening the capital management,establishing an effective financial early warning mechanism and improving the corporate governance structure.Finally,the paper summarizes the case analysis,hoping to provide references for other enterprises in the industry.