Research On The Problems And Countermeasures Of L’s Equity Investment In Subsidiaries

The global scarcity of non-renewable resources and the problem of natural environmental protection have become more and more serious.The photovoltaic industry has emerged and continues to develop with the solar energy.However,due to ideological concepts,technology and market constraints,my country’s photovoltaic market has started relatively late,there is a problem of overcapacity in the market.The leading domestic photovoltaic company-L has expanded on a large scale under the current market environment.It has continuously increased its equity investment in its subsidiaries.It has raised funds through various financing methods to increase production capacity and expand its scale.From 2010 to 2019,the operating problems arising from a series of equity investment activities of enterprises have gradually emerged,especially in terms of inventory turnover and cash flow turnover.Continued will threaten the sustainable development of the enterprise.Therefore,this article uses L Corporation as a case to analyze the problems and reasons of its equity investment activities,visually show the real problems to provide warnings and reference for similar enterprises that plan to invest in expansion.By analyzing the case it is found that L blindly put into production in the market with limited consumption capacity,causing the group’s equity investment activities and inventory management to be out of touch,inventory management can’t keep up with the speed of enterprise investment activities,and the overall inventory pressure of the enterprise group is relatively high.The price of inventories is rising;corporate equity investment is carried out in the form of newly established subsidiaries.The cost of establishing a new company is high,which will occupy the cash flow for a long time,and the cost of photovoltaic power generation is high,which makes the company’s investment income limited,and the profitability is poor;the company set up subsidiaries in various places without doing market research,and the internal management system of investment is not perfect,resulting in many subsidiaries been cancelled,and the funds invested were difficult to recover,resulting in capital losses;due to the continuous investment of the company,the free cash flow of corporate equity fluctuated significantly.Most of the years when huge negative values ? ? appeared,the shareholders’ equity was difficult to guarantee,and the capital chain has broken risk.In order to optimize the management of corporate equity investment,L can take the following measures: First,transfer the direction to downstream distributed photovoltaic power stations,which is conducive to the smooth integration of photovoltaic production models and the up-down connection and adjustment of inventory;secondly,enterprises can develop Intensive investment,concentrated and efficient use of the limited resources of the enterprise,optimizing the industrial chain structure,further reducing costs,and expanding profit margins;in addition,enterprises must strengthen internal equity investment decision-making and operation management,in-depth market research,and improve equity investment thresholds and project quality;finally for equity investment,companies need to establish a post-investment evaluation mechanism,strengthen supervision of invested subsidiaries,timely feedback,and continuous improvement.This research can provide certain reference significance for the follow-up equity investment adjustment of L,and provide some theoretical and practical reference for other photovoltaic companies in the growth stage to carry out equity investment expansion.