Research On Financial Leverage Effect Of Wuhan Iron And Steel

At present,China's economy has entered a new normal and its economic development has slowed down.The consequent policy changes have a great impact on the development of various industries,especially state-owned steel enterprises in the steel industry.Since 2015,due to the severe losses of steel enterprises,high financial leverage has made steel enterprises face higher debt repayment pressure,and the continuous operation risk and financial risk have been rising.In addition,high financial leverage makes it more difficult for steel companies to refinance.High financial leverage is a prominent problem in the steel industry,which seriously restricts the innovation and efficiency of enterprises.The whole steel industry faces great difficulties in operation and development due to the restriction of high financial leverage.Due to the negative effects of excessive financial leverage on enterprises,enterprises' operating performance,debt paying ability,income and other linear decline.Therefore,the state has put forward the measures of "three losses,one reduction and one compensation".Therefore,solving the problem of negative financial leverage has become the top priority in the development of iron and steel enterprises.This article from the financial leverage of wisco volatile representation into the theme,through the study of the annual report data in nearly eight years of wisco,analysis of wisco in the data period because of indebtedness of the negative effects of financial leverage brings to wisco.First of all,this paper introduces the industry background of the research object of this paper,wuhan iron and steel corporation.Then,through the financial data from the annual report of wisco in recent years,analyze the present situation of using financial leverage effect,at the same time will measure the level of financial leverage key indicators of asset-liability ratio and the same industry shougang steel as well as the industry average and river were analyzed.Secondly,mainly from the negative effects of financial leverage is wisco,manifestation and the cause of the financial leverage effect in three aspects: first,to analyze the effect of financial leverage is level,mainly from the interest tax effect andhigh income effect,and analyzes the form of negative effects,respectively from the debt scale,net income volatility,debt paying ability weak and low return on assets,profitability decline analysis due to high financial leverage to the negative effects of the problems of wisco;Three,mainly from the analysis of the financial leverage effect of wisco,this article mainly from the decline in revenue,the cost is too high,the product competitive advantage,and industry downturn,etc are analyzed.Thirdly,based on the causes of the negative effects,the paper puts forward some Suggestions to reduce the negative effects of financial leverage.This paper mainly puts forward Suggestions from diversified operation to improve profit points,improve capital structure,improve the liquidity of assets and seize the opportunity of market improvement.Finally,through the financial leverage effect of wisco case study some conclusions and Revelations of the problem,to prompt the iron and steel industry enterprises in the backdrop of the slow economic development,pay attention to the shortcomings of their own development,and actively improve,when the environment is bad,also can offer reference for rapid development itself.