A Study On The Motivation And Performance Of Lutianhua’s Bankruptcy Reorganization

In recent years,with the slowing down of China’s economic growth,some enterprises can not repay their own debts in their business activities.They can only rely on government subsidies and a large number of loans to maintain their operations,and gradually become "zombie enterprises".These "zombie enterprises" not only lost the ability to create profits,but also seriously affected China’s economic development.Therefore,our government has issued many policies to govern "zombie enterprises",including bankruptcy liquidation system and bankruptcy reorganization system.Compared with the bankruptcy liquidation system,the bankruptcy reorganization system is to try its best to save those enterprises which are temporarily in financial difficulties,but still have economic and operational value in the market,and give them a chance of rebirth.Therefore,most enterprises tend to choose bankruptcy reorganization when facing bankruptcy difficulties.However,after the completion of the implementation of restructuring,some enterprises have made profits in a short period of time,but in the following years,they began to make continuous losses.The reason is that the relevant parties only pay attention to their short-term profitability after the successful restructuring,and neglect to improve their long-term operating ability and sustainable development ability.Therefore,after the successful reorganization,enterprises must formulate effective business strategies according to their own actual situation in order to maintain their stable development.Therefore,to judge whether an enterprise’s bankruptcy reorganization is really successful,we need not only to observe its short-term profitability,but also to analyze its long-term operation and development.This paper selects Lutianhua,a large state-owned enterprise,as the case company of bankruptcy reorganization.Firstly,this paper briefly introduces the basic situation of Lutianhua,and expounds the specific measures and plans for its implementation of bankruptcy reorganization in 2018,and analyzes the main reasons for its bankruptcy reorganization.Secondly,it analyzes the changes of the company’s stock price before and after the bankruptcy reorganization,and selects the event study method to analyze the changes of the market performance before and after the bankruptcy reorganization by calculating the cumulative excess rate of return,and then uses the EVA analysis method to study the changes of the enterprise value before and after the bankruptcy reorganization.Thirdly,it uses the financial index analysis method to compare the financial performance of Lutianhua before and after the bankruptcy reorganization from the four aspects of profitability,operation ability,solvency and development ability.On this basis,it uses the entropy weight method to comprehensively evaluate the financial performance of Lutianhua’s bankruptcy reorganization.Finally,it is found that the improvement of market performance after the bankruptcy reorganization of Lutianhua is not obvious,which is greatly affected by the fluctuation of market share price in recent years;In the financial performance indicators,the profitability,operation ability and debt paying ability have been improved obviously,and the growth ability has been improved to a certain extent and then decreased,which still needs to be further strengthened;Its overall performance and enterprise value are also improved compared with those before restructuring,but its performance is easily affected by industry periodicity and international economic environment.According to the research results,this paper summarizes the improvement of the business situation and the existing problems after the bankruptcy and reorganization of Lutianhua,and puts forward relevant suggestions on improving the performance of the enterprise in terms of strengthening and optimizing the existing main business,fully promoting the transformation and development,strengthening marketing management,improving operation efficiency,optimizing the talent structure,and enhancing the market competitiveness of the company.