Research On The Financial Distress Of Furen Pharmaceutical Under The Perspective Of Internal Control

With the opening of Beijing stock exchange,more enterprises will move towards the capital market.However,in the sharp competition in the capital market,some enterprises,due to their own poor management and other reasons,have led to the decline of their sustainable management ability,trapped in the swamp of financial distress and on the edge of delisting,this not only means a huge loss of profit for minority shareholders,but also affects the healthy development of the capital market.As one of the necessary management tools of enterprises,internal control has experienced five stages of development.Effective internal control standardizes the behavior of the company,helps to improve the management level,and further promotes the sustainable and healthy development of the company.Ineffective internal control will bring a series of adverse economic consequences to enterprises and accelerate the situation of enterprises falling into financial difficulties.Therefore,it is necessary to study the formation of enterprise financial distress from the perspective of internal control,analyze the impact path of internal control defects on financial distress.Based on the research of domestic and foreign literature,this paper takes the information asymmetry theory,principal-agent theory and signal transmission theory as the theoretical support,adopts the method of case analysis,takes Furen pharmaceutical as the case study object,explores the causes of financial distress from the perspective of internal control,analyzes the impact of internal control defects on financial distress,and puts forward suggestions and countermeasures to prevent financial distress.Firstly,on the basis of determining that Furen pharmaceutical is in financial distress and the failure of internal control,it is found that the internal control of Furen pharmaceutical has five defects: weak internal environmental control,lack of perfect risk assessment mechanism,weak implementation of internal control activities,ineffective information and communication and ineffective internal supervision.Secondly,focusing on the analysis of the financial distress caused by the internal control defects of Furen pharmaceutical,it is concluded that the debt is too high and the solvency is weak;The operation was damaged and the profitability decreased;Credit damage and financing difficulties of the company;Four conclusions are drawn from the shortage of funds and falling into financial crisis,and the influence process of internal control defects of Furen pharmaceutical on financial distress is combed and summarized,which shows the causal relationship between internal control defects of Furen pharmaceutical and financial distress.Finally,From the perspective of internal control,this paper puts forward five suggestions and Countermeasures to prevent financial difficulties,including building a solid internal environment foundation,setting up a special risk management department,strengthening the control of capital activities,improving the effectiveness of information and communication and strengthening the functions of internal supervision institutions.The purpose is to improve the internal control system of Furen pharmaceutical industry,help it get rid of financial difficulties,and provide new ideas for other enterprises to optimize internal control and prevent financial distress.