Discussion On The Financial Causes And Countermeasures Of The Break Of Letv's Capital Chain

Capital chain is the guarantee for the survival and development of enterprises.Bankruptcy cases occur from time to time because of the breakage of capital chain.Letv broke out the crisis of fund breakage in 2016,the crisis of debt collection and the stock price plummeted,which forced Letv to reorganize its assets and adjust its development strategy.It is of great theoretical and practical significance for the sustained development of similar enterprises to deeply study the operation of Letv's capital chain and the financial causes of its breakage.In this paper,the background,process,causes and preventive measures of Letv's fund chain break are studied by case analysis and literature research.First of all,under the guidance of the theory of capital circulation and capital structure,from the three angles of capital investment,operation and return,the paper analyzes Letv's fund raising status,investment status and return condition in turn.It is concluded that the phase characteristic of Letv's capital chain operation is the steady development of the capital chain from 2010 to 2014,the smooth development of the capital chain,the acceleration of diversification since 2014,the rapid expansion of the scale of investment and financing,and the instability of the capital chain.Then,based of the identification model of capital chain break risk put forward by Zhang Jinchang and Fan Ruizhen in 2015,using eight discriminant indexes,such as asset-liability ratio,total asset turnover ratio,net operating interest rate,multiple of interest guarantee,etc,this paper measures the security degree of Letv's capital chain from the angle of static and dynamic combination,and analyzes the financial performance of the risk of fund chain breakage of Letv from three aspectsBased on the above analysis,this paper thinks that there are both external and internal factors leading to the breakage of Letv's capital chain.This paper mainly discusses the financial causes of the breakage,including the strong dependence of financing mode.The ratio of equity pledge is high;the investment strategy is radical,the expansion speed is too fast;the capital structure is unreasonable,the financial risk is high;the accounts receivable is increasing greatly,the related party transaction is very important.In view of these influencing factors,this paper puts forward four countermeasures to prevent Letv from breaking the chain of funds: quick external financing,make up the fund gap,reduce financial leverage,strengthen capital risk control,consolidate existing business and improve profitability;Adjust company strategy,return to steady development.