The possible reason for the reduction of the leverage ratio from 20.5% in 2010 to 19% in 2011was the increase of the equity of the enterprise,which resulted in the uncertainty whether the shareholders would like to continue to keep their shares in the second year.
The face that the Interest guarantee rate fell from 29.6 folds in 2010 to 25.2 folds to 2011 might have resulted in more bonds were issued by the company.However it was still larger than the ratio of 3:1.This ratio indicated that there would be no problem for the companies to pay the interests,which might attract more people to invest but the proportion is still more than 3:1,shows that the company has the ability to pay interest,which will attract more investment to the company creditors and help the company develop futher.
The increase of bank overdraft,long-term liabilities and due bill might be the main reason for the ratio of liabilities to assets to rise from 53.8% in 2010 to 56.9% in 2011.The fact of that the ratio of liabilities to assets has been over 50% for the last two years might be an indication that the companies may have no ability to repay creditors capital,which would decide whether the company should reduce short-term debts in 2012 to the company's risk.
In summary,the shareholders can continue to pay attention to the situation of the company and decide whether to increase or reduce the shares.The creditors can still loan to the company because the pay-in time of the company is much sooner than the out paymeny.As to the company,it should consider reducing the company's management staff in the new year,reducing the long-term liabilities and improving the sales strategy to reduce the stock.