Study On The Effectiveness Of Leverage Reduction And Debt Reduction In X Construction Enterprises

With the rapid development of the social economy and the continuous expansion of the scale of fixed asset investment,the construction industry has enjoyed a good market environment and a significant increase in its scale of operation.For the construction industry,which is a non-financial enterprise,the continued increase in leverage has not only gradually reduced the little leverage available,but has also greatly increased the potential risk exposure of enterprises.This article takes the government’s policy of vigorously reducing leverage and debt as the guide for research,and selects X construction company,a representative construction company in the industry,as a case company to analyse the effect of the measures implemented by it to reduce leverage and debt.The article uses the cost of capital theory and capital structure theory as the theoretical basis,and summarises the measures taken by the case company in terms of assets,liabilities and equity after a site visit to the research unit.Secondly,based on the publicly available annual reports of X construction enterprises from 2014 to mid-2020,the article analyses the changes in the four aspects of asset side,liability side,business operation and leverage ratio to analyse the effect of reducing leverage and debt of X construction enterprises.Finally,based on some problems in the implementation process,corresponding improvement suggestions are made.Through this case study,it is hoped that it can provide some reference and help for construction enterprises that are also facing high leverage and high debt on the road to deleveraging.