Case Study Of Financial Dilemma Of KAIRUIDE HOLDING CO.,LTD.

With the optimization and upgrading of China's industrial structure,the proportion of the primary industry and the secondary industry has gradually decreased,and the proportion of the tertiary industry service industry has gradually increased.The state formulates the "Internet +" top-level design,raises the development plan of the Internet and related service industries to a strategic level,and encourages the integration of modern data computing industries such as the mobile Internet with traditional manufacturing to provide more funding and development opportunities for industrial upgrading.As an emerging industry in recent years,the Internet industry has good prospects for future development,and has a broad market and huge market potential.Since the birth of the modern mobile Internet,the Internet and related services have maintained rapid growth.In 2019,industry-wide business revenue was 172.4 billion,an increase of 21.4% year-on-year,and the entire industry realized operating profit of 14.68 billion,an increase of 16.9%year-on-year.The annual increase is 13.1 percentage points.But at the same time,the industry is fiercely competitive,and companies are also facing challenges such as rapid technological innovation.Small and medium-sized enterprises are susceptible to macroeconomic factors and the risk of financial distress increases,which will not only bring risks to the enterprise itself,but also bring business risks to the upstream and downstream enterprises.The investment of corporate investors cannot be recovered,the interests of creditors are damaged,and the national economy is damaged.The environment has a negative impact.Therefore,the study of financial distress is of great significance to many countries,such as the state,enterprises themselves,suppliers and customers,investors,creditors and so on.KAIRUIDE HOLDING CO.,LTD.is an old domestic cotton textile company.Itsproduct quality and technical equipment are at the leading level in the industry.Both of its two series of products have been awarded the title of Chinese famous brand products.In 2014,the company achieved operating income of 10.967 million.However,due to the decline of the domestic real economy,the increase in the cost of production factors and the decrease in demand in the international market,China's cotton textile industry is facing severe challenges.In order to cope with the new situation,under the difficult internal and external environment,KAIRUIDE HOLDING CO.,LTD.decided to develop a diversification strategy,enter the Internet industry,upgrade its structure on the basis of the textile industry,and gradually transform to textile trade,Internet and related services.But with poor results,In2017-2018,the net profit was negative for two consecutive years,and the delisting risk warning was implemented.The company faced the risk of delisting,and the company was in financial difficulties,and later changed to * ST KAIRUI.This article takes * ST KAIRUI as a case,analyzes the causes of corporate financial distress and proposes reasonable countermeasures to help companies get out of financial distress.It also provides a reference for other companies in financial distress.This article has a total of four chapters to explore issues related to * ST KAIRUI financial distress.The first chapter summarizes the research on financial distress performance,causes,countermeasures and other related issues by scholars at home and abroad in recent years,summarizes related theories,and provides theoretical support for the analysis of the company.The second chapter introduces the company's background and business direction.It conducts horizontal and vertical financial statement analysis,and analyzes the company's financial status from 2014 to 2018 in four aspects: corporate debt repayment ability,operating ability,profitability,and growth ability.It compares Richinfo Technology Co.,Ltd.,KAISA Jiayun Technology Inc.,Zhejiang Furun CO.,LTD.We found problems such as heavy corporate debts,continuing losses,and insufficient cash flow.The third chapter studies the causes of corporate financial distress by analyzing the internal and external environment of the enterprise.The external causes mainly include three aspects: macroeconomic fluctuations,intensified industry competition,and rapidtechnological innovation.The internal causes are mainly the failure of corporate strategic transformation,lack of core competitiveness,chaotic governance mechanisms,and lack of financial early warning mechanisms.The fourth chapter aims at the above-mentioned causes,and puts forward suggestions such as strategic reorganization,improving the core competitiveness of the enterprise,improving the corporate governance structure,and using the financial distress early-warning model for early warning.By studying * ST KAIRUI financial distress,the aim is to provide advice for it to get out of financial distress,and also provide a reference for other companies to avoid the company's financial distress.The innovation point of this article is: In terms of the research object,* ST KAIRUI is a company that has undergone multiple strategic transformations.The main direction before 2016 was the cotton textile industry.From 2016 to 2019,the main direction became the Internet and acceleration.The service industry will gradually increase the input ratio of the coal industry in 2019 and vigorously develop the coal trading business.Due to the intensified competition in the external industry,the company has undergone frequent transformations and is inadequately prepared,and lacks core competitiveness.The chaotic corporate governance mechanism and the lack of financial early warning mechanisms have led to financial distress.In the past,the cases selected for the study of corporate financial distress did not have the frequency of strategic transformation * ST KAIRUI,but now with the economic development and the emergence of various emerging industries,many small and medium-sized enterprises choose to transform and enter new fields,which will bring business survival.It is easy to face financial difficulties,so the selection of the company is the innovation point of this article.In terms of theoretical research,this article summarizes the relevant theories of financial distress at home and abroad,discusses the relationship between corporate restructuring and corporate financial distress,and provides reference for related companies.