Research On The Causes And Countermeasures Of Financial Distress Of Taihe Group

China’s real estate enterprises have continued the business model of high debt and high leverage for a long time,with the continuous accumulation of risks,the continuous rise of capital pressure,and the rapid rise of domestic house prices.In 2016,China proposed "housing is for living in,not for speculation" and continually introduced regulatory policies.The sales of real estate slowed down,financing tightened and competition intensified.The disadvantages of many enterprises relying on high debt for rapid development are gradually exposed.Some real estate enterprises fell into financial distress due to capital chain crisis,and some small and medium-sized real estate enterprises are facing bankruptcy.In order to analyze the impact of the regulatory policies issued by the state and the changes in the industry situation on real estate enterprises in recent years,summarize the problems existing in the rapid development of real estate enterprises,and put forward solutions for real estate enterprises in financial distress to deal with the crisis,taking Taihe Group as an example,this paper studies its financial distress by using the methods of literature analysis,case study and quantitative analysis,trying to summarize the causes of the difficulties,and put forward the corresponding countermeasures.Firstly,it sorts out the research results of domestic and foreign scholars on enterprise financial distress,defines the concept of financial distress,and introduces the economic cycle theory,capital structure theory and cash flow theory used for the analysis of the article.Secondly,it combs the relevant regulatory policies and regulations of the real estate industry since the state proposed "housing is for living in,not for speculation",and analyzes the changes in the current business situation of the industry.According to the financial data of Taihe Group from 2014 to 2020,it describes the performance of Taihe Group in financial distress,including the decline of solvency,profitability and operating ability,the deterioration of cash flow quality and a number of debt defaults,these are the typical characteristics of enterprises entering financial distress.Then,the paper analyzes the causes of Taihe Group’s financial distress,including the slowdown of real estate sales,the reduction of real estate enterprise profits,the tightening of industry credit and the intensification of industry competition;internal factors include the company’s deviation from policies,blind expansion,unreasonable capital structure,slow removal of main products,capital occupied by restricted assets and other receivables,and large inventory falling price loss.Under the superposition of internal and external factors,Taihe Group fell into financial distress.Based on the causes of the above difficulties and the new situation of the industry,this paper puts forward corresponding solutions for the company,including optimize sales mode,strengthening cost management,seeking for diversified financing,adjusting strategy according to market changes,optimizing capital structure,enriching product types,enhancing liquidity and so on.Taihe Group relied too much on debt for expansion,coupled with the impact of strict regulatory policies and fierce industry competition,and finally stepped into financial distress.The case of Taihe Group gives some warning to other real estate enterprises.Under the new situation,it is necessary for real estate enterprises to control and deal with existing problems and actively take measures to deal with new challenges.This paper uses specific cases to analyze the financial distress from the two aspects of macro environmental changes and enterprises’ own behavior,which enriches the research on the financial distress of real estate enterprises and is innovative.