Case Study On Financial Distress Of Zhongyida Co.,Ltd.

In the context of further intensification of global competition,the business risks of enterprises are becoming higher and higher,and the number of enterprises that end up in financial difficulties due to various internal and external reasons is climbing.The business development environment is gradually becoming a fierce red sea,and the continuous influx of other companies and the increasingly fierce competition in the market have forced many companies into financial distress.Financial distress can bring economic losses to the shareholders and other stakeholders and affect the growth of the company.Therefore,helping enterprises analyze the reasons for falling into financial distress and proposing relevant measures will help them get out of the predicament,improve their profitability,reduce the losses of stakeholders,warn enterprises in the same industry to avoid risks,promote the industry to improve its development level,promote the healthy and orderly development of the capital market,and make certain contributions to the sustainable development of the socialist market economy.Shanghai Zhongyida Co.,LTD.（hereinafter referred to as Zhongyida Co.）is listed on the Shanghai Stock Exchange,issuing A and B shares.In 2014,Zhongyida Co.restructured its assets and changed its main business to the landscape industry.In that year,it turned a loss into a profit.After experiencing turbulence in the control of the company and being included in the list of persons subject to enforcement for trust-breaking by the court,Zhongyida Co.lost the control of its subsidiaries,its capital chain was broken,its business operation was paralyzed,and it suffered huge losses for two consecutive years and fell into serious financial difficulties.In 2019,relevant parties took various measures to achieve normal operation,and Zhongyida Co.returned to profit.This paper seeks ways to get rid of corporate distress based on relevant management theories combined with corporate cases,and collates,summarizes,and studies from the perspectives of domestic and foreign scholars on the definition of financial distress,prediction of financial distress,causes of financial distress,and research on financial distress and corporate governance,etc.This paper is divided into four chapters.The first chapter is the introduction,which focuses on the background and significance of this case study,the methodological theories involved,and a literature review of related theories.The second chapter is the case introduction,which introduces the company and understands the operation situation of Zhongyida,compares Zhongyida with other companies in the same industry by analyzing financial and non-financial indicators,and provides an in-depth analysis of the financial and non-financial aspects of solvency,operating capacity,profitability,and development capacity.The third chapter analyzes the causes of fi ncial difficulties.The causes of the gradual financial difficulties of Zhongyida are analyzed mainly from two major aspects:internal and external.Internally,the impact of internal causes on the financial difficulties of Zhongyida is studied from several levels,such as corporate governance mechanism,corporate strategic direction,cash flow management,and,capital structure.Externally,the impact of external causes on the financial difficulties of Zhongyida is analyzed at two levels:the development trend of the macro environment of the company and the characteristics of the industry.Chapter four is the suggestions and insights of countermeasures for financial difficulties.Given the causes of financial difficulties,countermeasures and suggestions to get rid of financial difficulties are proposed in terms of strengthening financial management,improving profitability,and,optimizing the internal governance environment of the company.On this basis,insights that can be learned from improving the efficiency of the securities market and improving the effectiveness of the securities market are proposed to promote better development of the industry and the market.This paper systematically analyzes the performance of financial indicators and nonfinancial indicators of Zhongyida over the past five years,finds out the reasons for its financial difficulties from the performance,and then proposes corresponding solutions and insights for the reasons.It is hoped that it can help the company to get out of financial difficulties and also provide a reference for other companies facing similar situations to avoid financial difficulties.