The Case Study On The Financial Distress And Countermeasures Of S Petroleum Engineering Company

In 2014,the international oil price dropped and remained low,which caused a heavy blow to the oilfield technology service industry.The environment of falling workload and service price makes it difficult for domestic and foreign oil service enterprises to operate.Many of China's oil service enterprises are facing serious financial problems.With the deepening of marketization of China's economy,more and more enterprises are participating in fierce market competition.Therefore,the probability of financial distress increases,and the urgency for stateowned enterprises to carry out system and mechanism reform increases greatly.Oil service enterprises need to deal with the direct impact of external environment and get rid of financial difficulties.State-owned oil service enterprises also need to complete the task of state-owned enterprise reform and marketization.Therefore,the analysis of the causes and measures taken by the distressed oil service companies,especially the state-owned oil service companies,can provide valuable references for the related enterprises to get rid of financial difficulties and achieve sustainable development in the new normal of low oil price.In this paper,S petroleum engineering company,a local petroleum technology service enterprise affiliated to Sinopec Group,is selected as the case object to analyze its financial distress and countermeasures with the method of case study.Firstly,the paper has sorted out the existing relevant literature and theories,and the definition of financial distress in this paper is put forward.Then,on the basis of the introduction of S company's operation and management,this paper combined with the analysis of financial information found that S company's financial situation has three performances,namely,heavy debt burden,huge profit loss and serious cash flow shortage,indicating that the company has been in deep financial distress.Through field research and expert interviews,this paper finds that the direct cause of the company's financial distress is the external environment,especially the decline of oil price.And the deep-seated reason that predicament forms is internal management problem.At the same time,the paper has used the financial statement analysis method to further analyze the company to take the effect of the countermeasures.It is found that after taking measures,S company's financial and operating conditions have improved somewhat,but there are still some problems in financial and operating management,such as unimproved solvency,weak profitability and quality,and unsolved structural contradictions among equipment operators.Based on this,this paper combined the interview information of internal and external experts to analyze and evaluate the financial distress coping strategies adopted by S company,and found that S company has problems such as poor pertinence,execution deviation and "expediency" in the formulation and implementation of strategies.Finally,the corresponding case enlightenment is obtained through case analysis,which can provide some reference for similar enterprises,and puts forward strategic suggestions from the perspective of short-term,long-term and parent company group companies.