A Case Study On The Financial Distress Of LDK Solar On The Supernormal Growth

From 2000,the photovoltaic(PV)industry has been developed rapidly and has a high progress.Base on the statistical data from 2006 to 2010,the domestic annual output of PV cells was more than 100% rate.Enve there were more than 1000 PV companies in domestic in 2010.But when coming to 2012,because European sovereign debt and Double reverse investigation from America happened,the level of profit of domestic PV companies has fallen sharply,and even some companies have been in a loss of status.As a leading enterprises in domestic PV companies,LDK Solar had always kept a supernormal growth rate for many years,but in 2012 it also fallen into the serious financial distress,and went into bankrupts in 2014.For a supernormal growth company,why it also fall into the financial distress? This is a question which is very worthy to think and study deeply.The paper is a case study about LDK Solar.It will discuss which is the reason of the financial distress of LDK Solar,and how the supernormal growth effect to the financial distress in company based on the financial reports of LDK Solar in 2006-2012.There are four chapters in this paper.:The first chapter is Introduction,which introduces the purpose and the sense of this paper,the progress of study,and the content,the method,and the struction of study.The second chapter is Text of the case,which introduces the general situation of LDK,the general situation of the financial distress,and the characteristic of the financial distress.The third chapter is Analyse of the case.There are three sections in this chapter: the state of supernormal growth,the reason of the financial distress,and the influence which the supernormal growth bring to the financial distress.The forth chapter is Inspiration of the case.There are four sections about the managment of growth,the replied measure of the financial distress,the enhance of competitive power and the development of Photovoltaic.The conclusion of the paper is as follows: The first,the period of the supernormal growth of LDK Solar is very short,so the supernormal growth is not sustainable,which may be lead to some risks.The second,there are two types of reason about the financial distress of LDK Solar,which are the external reason and the interior reason.The interior reason is more directly and important belong them which is root in the high risk of interior management.The third,there is any relativity between the supernormal growth and the financial disress,but it is not evidently.The forth,the mechanism how the supernormal growth influence the financial disress is that: the supernormal growth will lead to the high risk of interior management,when it come across the external market of high risk,and the two factors together will cause the worsen the financial standing.If the company do not effectively resolve this question,so the serious financial distress will come.The paper discuss some questions about the supernormal growth,the financial distress,and the relativity between them which is a case study about LDK Solar.It is very significant for other company which how deal with the relativity between the speed of the growth and the risks of company and how reply the financial distress when the external environment changes.