Basic Understanding Of Enterprise Financial Crisis

(1) the meaning and manifestation of enterprise financial crisis

The financial crisis is caused by various reasons, such as the continuous deterioration of the financial condition of enterprises, the aggravation of financial risks, and the occurrence of a series of events that can not repay debts due to maturity.

Generally speaking, the financial crisis is insufficient capacity to pay or loss of capacity, but in specific terms, there are many manifestations:

1. From the perspective of asset stock, the net book value of the total assets of an enterprise is equivalent to or less than the debt amount recorded in the book record, that is, the net assets of the enterprise are less than or equal to zero.

When the net assets of enterprises are negative, the so-called "insolvency" indicates that the enterprises are bankrupt in fact.

2, from the perspective of sustainable management, the main business volume of the enterprise continued to grow negatively, the market sales were dim, the profitability was poor, and there was a huge amount of uncompensated losses.

3, from the perspective of cash flow, cash inflows are less than cash outflows, and operating cash flows are negative, often accompanied by the shrinking of capital flows. Some necessary constraint expenditures are compressed or defaulted, and the abnormal situation of such cash flows is in a long-term state of continuity, and their debt paying obligations should be hindered.

4, due to frequent arrears of payments, the loss of corporate credit makes it difficult to raise the necessary supplementary funds from the corresponding financing channels such as suppliers, financial institutions or capital markets, so as to maintain daily expenditure or basic debt repayment needs, so that the sources of corporate capital are increasingly exhausted, thus stepping into vicious circle, resulting in serious financial crisis and bankruptcy.

(two) characteristics of corporate financial crisis

It can be seen from the definition of financial crisis that it refers to an economic phenomenon that enterprises can not afford to pay debts or expenses due to maturity. The characteristics of financial crisis can be summarized as follows:

1, objective accumulation.

The objective accumulation of financial crisis is the concept of the period. It reflects the mistakes of enterprises in various aspects such as raising funds, investing, occupying, consuming, recovering and distributing, rather than a fault in a certain time point of accounting statement, that is, the synthesis of various financial activities.

2, sudden.

Financial crisis is influenced by many subjective and objective factors. Some factors can be grasped and controlled. However, more factors are explosive and unexpected. Some of them even turn sharply.

3.

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Due to the diversification of business environment, business process and financial behavior, any links in these activities may cause problems.

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4, catastrophic.

Although the financial crisis includes many situations, whether it is the failure of capital management technology, or the bankruptcy of enterprises, or any situation between them, it will bring disastrous losses to enterprises.

(three) reasons for financial crisis in Enterprises

1, the existence of business risk.

The main factors that affect business risk are: market demand for enterprise products, sales price of products, stability of price of production materials, adjustment ability of enterprises to product sales price, change of unit product variable cost, high and low total cost of fixed enterprises, and professional quality and management experience of managers, among which the decisive factor is management quality.

2, enterprises lose financing ability.

An important way to repay corporate debts is to repay debts with new funds.

The new funding includes equity capital and debt fund.

It is inevitable for an enterprise to lose its ability to raise its financing capability (or no financing capability), and the cash of the enterprise is not enough to maintain the continuous operation of the enterprise. At this point, the debt of maturity can not be liquidated. Therefore, the loss of the enterprise's ability to raise funds is the primary reason for the financial crisis.

3, enterprises

poor

Reasonable cash flow is the need to maintain the operation and operation of an enterprise under an appropriate capital and financial structure, and to maintain the survival and development of an enterprise under strong liquidity.

In daily economic life, sometimes a profitable company will go bankrupt.

Whether a company's cash flow is reasonable is mainly reflected in the quality of corporate earnings, the structure of cash flow and the ability to pay.

4, the strong and weak liquidity of enterprise assets

5, corporate debt structure and enterprise asset occupation duration matching (i.e. financing policy) is unreasonable.