Case Study On The Financial Distress Problem Of Guirenniao Co.,Ltd.

With the rapid development of China's capital market,competition among enterprises is becoming increasingly fierce.And the risk in finance is also increasing,which makes it more likely that enterprises will fall into financial distress.The financial distress of a company is not caused by a single day,but the result of the gradual deterioration of its financial situation.And if the financial situation continues to deteriorate,it may eventually lead to bankruptcy.Therefore,the research on financial distress in recent years has received extensive attention from the theoretical and practical circles.The analysis of the reasons for a company's financial distress can help companies prevent or get rid of financial distress.In addition,it is of great significance to protect creditors,small and medium shareholders and other stakeholders.This paper selects Guirenniao as the research object.On the one hand,China actively promotes the development of the sport industry.At the same time,with the improvement of residents' consumption level and increasing health awareness,more and more people participate in various sports,which will directly benefit the development of sport industry.Although the entry of international sports brands has led to more intense competition in China's sport industry,the industry still has a lot of room for growth.On the other hand,as the first sports brand listed on the A-shares market,the market value of Guirenniao once exceeded 40 billion yuan,but now the market value of it is only less than 2.5 billion yuan.In 2015,its stock price began to fall continuously.In 2018,it suffered its first loss and it is anticipated to continue to lose in 2019.Now,it is at risk of being issued a delisting risk warning.First of all,this paper summarizes the relevant literature on the concepts,causes and countermeasures of financial distress and elaborates the relevant theories as the theoretical basis of this paper.Secondly,this paper analyzes and summarizes the performance of Guirenniao's financial distress.The financial performance indicators include the continued deterioration of debt repayment ability and high debt repayment pressure,poor operating ability,high period expenses,continuous decline in profitability and loss of net profit for two consecutive years.When analyzing its solvency,operating capacity and profitability,the paper selects its data from 2013 to 2018 and compares it with four companies in the same industry which can more directly reflect the current operating condition and development tendency of Guirenniao.The non-financial performance indicators include default on bonds,sharp decline in share price and risk of delisting risk warningsThirdly,after summarizing the performance of Guirenniao s financial distress,this paper reveals the causes of its financial distress from both external and internal factors The external factors are mainly cyclical macroeconomic fluctuations,intensified industry competition,rising raw material prices and labor costs.The internal factors mainly include blind diversification,irrational capital structure,excessive shareholding of the largest shareholder,lack of effective risk early warning mechanism and lack of talentsFinally,due to the uncontrollable changes in the external environment,this paper proposes the following improvement suggestions based on the above-mentioned internal factors:Guirenniao should focus more on the development of its major brand,optimize the capital structure,make the corporate governance mechanism more effective,improve the financial risk warning system,introduce outstanding talents and improve employees'education system.At the same time,the paper provides the following enlightenment for listed companies:enterprises should try its best to enhance core competitiveness and establish a good sense of risk.The paper may give listed companies warning and reference to avoid falling into financial distress.