Research On Financial Distress Of KYT Company

Financial distress is an important topic in the financial research field in China, and it is alsoone of the most important topics concerned by enterprises. As is known to all, financial distressis financial crisis, and the most serious situation is bankrupt. In the process of enterprise’s growthand development, many decisions and actions are reflected in financial situation directly, if thedecision is improper, it will cause serious financial problems. Financial distress is notaccomplished at one stroke, but result of internal and external factors influence. When financialcrisis appear, enterprises should have a correct understanding and find out the the causes offinancial distress, solve the problem through the reasonable measures. Therefore, the causeanalysis and countermeasures of financial distress has not only strong academic value inacademic circles, but also important practical significance for the operation of enterprises.Firstly, the article summarizes related academic achievements of domestic and foreignscholars on financial distress through the method of literature retrieval, and divides theachievements into three perspectives, cause and control of financial distress, and objectivelyanalysis the three kinds of literature retrieval. Secondly, combining the KYT case the articleintroduces the definition of financial distress and elaborates the characteristics of the financialstatements of troubled companies.Then the paper uses SAS to analyze KYT company from thestrategy, the accounting policy and financial statements comprehensively and deeply, and findsout causes of KYT financial distress, including bad asset quality, irrational asset structure, badmanagement of accounts receivable, excessive debt and poor quality of main business income.Finally, this article provides some enlightenment for small and medium-sized enterprises onpreventing and defusing financial distress according to the KYT case. Risk always exists in thebusiness development, if improper handled, the enterprises will fall into financial distress. Ofcourse, financial distress isn’t the vast territory, it could be prevented and controlled. Enterprisesshould establish awareness of risk prevention, combined with their characteristics and buildeffective prevention measures and countermeasures, which make financial distress into a turningpoint of enterprise regeneration and promote its healthy and sustainable development.