Research On The Financial Distress And Countermeasures Of MS Company Under Diversified Expansion

Facing the changing external environment,companies often seek a longer-term development and better performance through diversified expansion.Of course,successful diversification can enable companies to get involved in new areas,form synergies between different businesses,and achieve strategic transformation.But diversified expansion also has great risks.Unreasonable expansion can not only obtain the synergy between various businesses,but also easily bring serious financial risks to the enterprise and even cause the enterprise to fall into financial difficulties.Among them,MS Company is facing such a dilemma as a new energy listed company.Since adopting a diversified expansion strategy in 2015,its benefits through massive mergers and acquisitions have attracted much attention.However,the company's recent operating performance and financial data have fallen off a cliff.Currently,MS has fallen into the financial predicament of insolvency and broken capital chain.Under the above background,this article will study the causes and countermeasures of MS's financial distress from the perspective of diversification and expansion.First of all,this article diagnoses the financial status of MS from two aspects: financial data and capital market.The study found that companies are facing greater pressure for debt repayment,their operating capacity and profitability are also seriously inadequate,and the capital chain is on the verge of breaking.MS has been implemented a "delisting risk warning".Therefore,MS company has been in financial trouble.The Z-score model test is consistent with the above conclusion.Second,this article explores the reasons why MS companies are in financia l trouble from a diversified perspective.The analysis found that the diversification of MS companies led to many financial problems: the rapid expansion of diversification led to excessive reliance on debt financing,excessive pressure on debt repayment,but the main business lacked the ability to generate internal cash;the company provided many subsidiaries Guarantee,but the subsidiaries are also in trouble and drag down MS companies;the sudden change in the market environment and the cancellation of subsidy policies make the operation of the main business more difficult.The highly concentrated shareholding structure and the inability to democratize corporate decision-making have led to inappropriate and diversified decision-making by MS companies.Therefore,the radical diversification and expansion of MS is an important reason for its financial distress.Finally,in response to the above problems,this article proposes countermeasures: to deal with the financial difficulties that have been formed,as soon as possible to clean up the business that produces serious negative profits for the company,and adjust the financing structure based on debt financing is the top priority;the company should also be based on its Core business,gradually improve the company's profitability,and provide protection for the implementation of a diversified expansion strategy;in the process of getting out of financial distress,the company should continuously improve its governance mechanism and increase board members to ensure that the company's decision-making can be democratized and Scientific.This case study helps other new energy companies learn from their experience in diversified development,to avoid risks that may arise during the diversification process,and to promote the company's healthy development.This case study can also provide a reference for the management of other listed companies to plan for diversification,consider whether the company itself can diversify,and avoid blind diversification causing fina ncial risks or even financial difficulties.