Capital structure analysis paper 1
Analysis on the Capital Structure of Modern Enterprises
By studying the relationship between financial management objectives and capital structure theory, this paper probes into how to optimize the capital structure of enterprises, and on the basis of analyzing the relevant factors influencing the capital structure of enterprises, puts forward some suggestions on optimizing the capital structure of enterprises.
Keywords: capital structure; Optimization; Market;
First, China's enterprise capital structure status and problems
(A) listed companies prefer equity financing
According to the financing order preference theory and the financing order of the western efficient capital market, there is internal financing first, then risk-free or low-risk debt financing, and finally new equity financing, while the financing order of listed companies in China is almost the opposite, and equity financing takes precedence over debt financing, which has a strong preference for equity financing.
Due to the imperfect market competition mechanism in China and the lack of corresponding supervision and restraint mechanism, enterprises entering the market system mainly consider effective and more capital supply in the choice of financing structure, while the cost difference and risk measurement of financing have become irrelevant. Once many enterprises have been approved to go public through the shareholding system reform, they regard stock financing as the first way of company financing. On the other hand, lower financing cost is the economic motive force for enterprises to prefer equity financing. Interest payment of debt financing? Hard constraints? Stock financing dividend? Soft constraints? The cost of debt financing in China is much higher than that of stock financing, and excessive speculation by stock market investors has also aggravated the irrational development of the stock market. Seller's market? And then what? The money-making effect? So far, there are few precedents of failure in stock issuance. Therefore, it pursues high stock issuance when going public, introduces a high proportion of rights issue after listing, and adopts equity restructuring to absorb the injection of new capital after losses. Is that right? One-year rights issue, two-year rights issue and three-year restructuring? It has become a true portrayal of equity financing of many companies, and it is also a reflection of the imbalance of market governance mechanism. This practice is not only not conducive to the improvement of the capital structure of enterprises, but also to the decline of the sustainable profitability of listed companies, and is not conducive to the constraints and incentives of enterprise investors on operators.
(B) Non-listed companies pay attention to bank debt financing, and the asset-liability ratio is too high.
1. There is irrational demand for bank loan financing.
At present, China's non-listed enterprises mainly rely on debt financing, especially bank loan financing to solve their capital needs for survival and development. From a purely economic point of view, higher asset-liability ratio has higher investment risk; For enterprises, higher financial costs are needed; For investors, higher investment returns are required.
2. Ignore the flexibility of capital structure, resulting in unreasonable debt structure and bad debts.
The capital structure of an enterprise must be adjusted with the changes of external factors such as the operating environment and financial market, otherwise, the enterprise will not be able to flexibly adapt to the changes of financial market and make full use of financial leverage. A considerable number of enterprises in China have problems related to debt structure, such as single debt source, centralized repayment period and improper use of debt funds. The inflexible capital structure leads to unreasonable debt source structure, debt maturity structure and debt use structure, which increases the debt risk of enterprises. When the enterprise's anti-risk ability is weak, it will make the enterprise fall into a difficult predicament.
(C) The proportion of external financing is unbalanced, and the proportion of bond financing is low.
At present, equity financing of listed companies in China accounts for 73% of external financing, and the total amount of corporate bonds issued in China is less than115 of the stock market value. In the capital market of developed countries, the proportion of corporate debt financing is greater than that of equity financing.
Compared with equity financing, the bond financing of listed companies in China is negligible. Since 199 1, the financing in China's corporate bond market has shown an obvious downward trend. After 1996, compared with stock financing, bond financing only accounts for 10%? 20%。 China's corporate bond financing ability is not strong enough, and the bond market structure is unreasonable. The fundamental reason for these phenomena is that China's capital market is still in the development stage, and many market mechanisms need to be improved and developed.
Second, the countermeasures to optimize the capital structure
(A) learn from modern capital structure theory, based on the capital market, to build the micro-foundation of China enterprise capital structure.
Objectively speaking, in the process from non-debt operation to debt operation, when the proportion of early debt increases, the comprehensive cost of the enterprise shows a downward trend, while the enterprise value shows an upward trend; When the proportion of debt financing increases to a certain extent, the increased cost exceeds the available income. So the comprehensive cost begins to rise, and the ratio of debt capital to equity capital at this time should be the optimal capital structure.
1. Control the financing risk, determine a reasonable debt scale, implement the marketization of financing operation and securitization of financing methods, and improve the financing concept while increasing the capital composition ratio. First, it is necessary to scientifically predict the capital needs of enterprises. When enterprises borrow money, in order to avoid blind debt, they need to make reasonable plans for future production and operation activities, analyze fixed funds and working capital according to the surplus and shortage of funds, and work out a reasonable debt amount to ensure the smooth progress of production and operation activities; Second, reasonably determine the ratio of debt to equity capital. According to the financial leverage effect of debt, the interest rate of enterprise borrowing funds and the expected return on investment, determine the reasonable proportion of debt and equity capital; Third, comprehensively consider the conditions attached to the loan. It is necessary to comprehensively consider the relationship between the remuneration paid to creditors with funds and the expected rate of return on their own investment with funds.
2. Effectively use the operation mode of capital market to optimize the capital structure.
(1) Asset reorganization. As a way of capital operation, asset reorganization aims to maximize capital appreciation by adjusting and changing the enterprise property rights of different legal entities, the ownership and creditor's rights of investors, and reorganizes various capitals of enterprises. Specifically, it includes: asset stripping, asset replacement and asset injection.
(2) Capital expansion. Through the repeated use of external trading strategies such as mergers and acquisitions, capital expansion is realized, and economies of scale, market share and competitive advantage are obtained.
(2) From the macro policy point of view, the institutional arrangement is the key to vigorously develop the capital market.
1. Vigorously develop the bond market and optimize the structure of the securities market
To solve the structural contradictions in China's capital market, one is to speed up the innovation of financial instruments, such as: implementing asset securitization to improve the liquidity of debt capital; Using interest rate swap can reduce the limit of bankruptcy cost in financing decision-making and obtain the maximum tax revenue. Second, vigorously develop the corporate bond market and increase the debt financing ratio of listed companies.
The development of the bond market should start from the following aspects: deepening the market-oriented reform of bond interest rates, canceling the practice of linking corporate bond interest rates with bank interest rates, steadily expanding the floating range of corporate bond interest rates, and realizing a market-oriented interest rate formation mechanism that completely determines the level of corporate bond interest rates according to market demand; In order to steadily push forward the reform of the examination and approval method of corporate bond issuance, the government should dilute or gradually cancel the plan or scale management, change the administrative examination and approval system into the approval system, and finally establish the corporate bond market system under the effective supervision of the government; Establish and improve the credit rating system and vigorously develop credit rating agencies; Establish a multi-level bond trading market system, improve the liquidity of corporate bonds, strengthen the social supervision and social constraints of corporate financing funds by increasing corporate bonds, and distinguish between corporate and bank credit financing.
2. Cultivate rational investors
Vigorously develop the investment banking business in China, and reduce the blindness of financial decision-making of listed companies. In China, the role of investment banks is far from being fully recognized, and many investment and financing activities have not been carefully consulted and analyzed by investment banks. In terms of policies and regulations, it should be stipulated that all companies that require to issue securities and issue additional securities must have a detailed demonstration by consulting institutions and rate the bonds issued. In order to promote the development of intermediary service institutions and make the investment and financing behavior more rational. Education and training for investors is an important part of it. In this regard, countries with developed capital markets have many successful experiences. The success of a new investment tool is closely related to the understanding and acceptance of investors. The rationality of investors' behavior is an important prerequisite for the rationalization of the whole market, that is to say, only rational investors can have a rational market, and such a market can also play its greatest efficiency and role.
3. Further improve and perfect the delisting and bankruptcy system of the company.
Giving full play to the role of debt is an important part of establishing and perfecting an effective corporate governance mechanism. The role of debt plays an important role in restraining managers' moral hazard, transmitting internal information of the company, reorganizing and rebuilding the company through the transfer of control rights when the company is on the verge of bankruptcy, and making the company reborn. However, the effective performance of the liability function depends on whether there is a sound bankruptcy system. This delisting bankruptcy system should be effective in at least two aspects: first, bankruptcy must have an impact on both monetary and non-monetary interests of company operators; Second, when the company is on the verge of bankruptcy and creditors restructure and rebuild the company, the control of the company must be transferred from shareholders and operators to creditors. On the basis of the normal and effective operation of exit mechanism and bankruptcy mechanism, strengthen creditors? Camera control? Improving the efficiency of corporate governance structure is conducive to the optimization of capital structure.
References:
[1] yue. On the optimization of capital structure of listed companies in China [J]. Journal of Beijing Technology and Business University (Social Science Edition) .2004, (5)
[2] Hong Qing. Corporate Capital Structure and Governance Structure: International Comparison and Enlightenment [J]. Enterprise Economy .2004, (1)
[3] Xu Yun, Huang Xiaogang. Analysis of capital structure evaluation model of listed companies in China [J]. Business Research .2004, (1)
Capital structure analysis paper II
Quality analysis of enterprise capital structure
Analyzing the causes of liabilities is helpful to distinguish the subjective and objective causes in the process of liabilities, which is particularly important for internal managers of enterprises.
Keywords: capital structure; Current liabilities; non-current liability
First of all, the quality analysis of enterprise capital structure should mainly focus on the content.
Generally speaking, the cost of capital refers to the price paid by enterprises to obtain and use capital, which mainly includes the financing expenses in the process of financing and the use expenses in the process of using. Among them, financing expenses refer to the expenses of application, registration and printing. In the process of obtaining funds (such as issuing bonds, stocks and other financing methods); Royalty refers to the interest, dividends and other remuneration paid to fund providers by enterprises for using funds in a certain period of time.
In this way, from the perspective of financial management, in addition to the financing cost, the capital (liabilities) raised by enterprises from creditors and the capital raised from shareholders all have the problem of capital cost. The capital cost of an enterprise should refer to the weighted average cost of the debt cost of the enterprise and the capital contribution cost of shareholders. When the weighted average cost of capital is greater than the rate of return on assets, the capital structure of an enterprise will lead to the gradual shrinkage of its net assets. In this case, we can only think that the quality of the capital structure of enterprises is poor.
From the perspective of term composition, the owner's equity part of enterprise capital source belongs to the permanent capital source under the condition of limited liability company. The liabilities of enterprise's capital sources are divided into current liabilities and non-current liabilities. When the term composition of enterprise capital source is suitable for enterprise asset structure, the author thinks that the quality of enterprise capital structure is better; On the contrary, the quality of capital structure of enterprises is poor. It should be noted that due to the needs of strategic development, some enterprises often find that the term of capital source is not compatible with the asset structure of enterprises. At this time, we should make a dynamic analysis according to the specific situation, and we can't easily draw conclusions.
According to the general financial management theory, the higher the financial leverage ratio of enterprises, the greater the dependence of enterprise resources on liabilities. In the case of high financial leverage ratio, enterprises will face two major financial pressures: first, they cannot repay the principal and interest of due debts normally; Second, when the enterprise suffers losses, the creditors of the enterprise may be infringed because the proportion of owners' equity is relatively small. Affected by this, it will be much more difficult for enterprises to obtain funds from potential creditors. In other words, the high leverage ratio of enterprises will increase the difficulty of future debt financing to meet the normal business development in the future. Therefore, enterprises with high financial leverage ratio have relatively high financial risks.
We know that according to the influence of corporate shareholders on enterprises, corporate shareholders can generally be divided into three categories: controlling shareholders, shareholders with significant influence and shareholders without significant influence. Among them, the controlling shareholder will have the right to decide the financial and operating policies of the enterprise; The main influential shareholders have the right to participate in the decision-making of enterprise financial and operating policies, but they do not decide these policies; However, unimportant shareholders have little influence on the financial and operating policies of holding companies. Obviously, the controlling shareholder and the main influential shareholders will determine the future development direction of the enterprise. Therefore, when analyzing the capital structure of enterprises, we must pay attention to the background of controlling shareholders and important shareholders of enterprises. Who controls (and has a great influence on) a specific enterprise, and whether the shareholders who control (and have a great influence on) a specific enterprise have the ability to lead the enterprise to a bright future?
Second, the quality analysis of current liabilities and non-current liabilities
1. Quality analysis of current liabilities
The current liabilities of an enterprise refer to the debts that should be repaid within 65,438+0 years, including short-term loans, transactional financial liabilities, notes payable, accounts payable, advance receipts, employee salaries payable, taxes payable, interest payable, dividend payable, other payables, non-current liabilities due within 65,438+0 years and other current liabilities.
In the process of analyzing the turnover rate of current liabilities, we should pay special attention to the scale changes of notes payable and accounts payable and their relationship with the scale changes of enterprise inventory. With the large increase of enterprise inventory and the rapid growth of enterprise bills payable and accounts payable, the scale growth of bills payable and accounts payable may represent the creditor's rights risk of enterprise suppliers to a great extent.
For the short-term solvency of an enterprise, what can really affect the actual solvency of the enterprise are those compulsory debts, such as notes payable, accounts payable, bank loans, dividend payable, contractual liabilities, etc. For accounts received in advance, some accounts payable, other accounts payable, etc. Due to some factors, it is not necessary to pay in the current period. In fact, it does not constitute the short-term payment pressure of enterprises, and it is a non-mandatory debt.
Generally speaking, short-term loans of enterprises are mainly related to the business activities of enterprises, and are usually used to supplement the working capital of enterprises. However, in practice, the scale of long-term and short-term loans of enterprise assets and liabilities may far exceed the actual demand.
As far as the business quality information contained in the quantitative changes of notes payable and accounts payable is concerned, it is generally believed that the relative scale of notes payable and accounts payable represents the ability of enterprises to use commerce to promote their business activities and also reflects the bargaining power of enterprises relative to suppliers. Because the financial costs of bills payable and accounts payable are different (in the case that commercial bills are generally accepted by banks in China, bills payable have costs), we can see the management quality of enterprises from the changes in the number of bills payable and accounts payable.
The payment of income tax in the amount of tax payable by enterprises can, to a certain extent, see through the tax environment of enterprises. Because there is an important correspondence between items in the balance sheet, the quantitative changes among income tax payable, deferred income tax and income tax expenses in the income statement can, to some extent, see through the tax environment of enterprises.
2. Analysis of non-current liabilities
According to financial theory, the non-current liabilities of enterprises should be the source of funds that constitute the long-term stable part of non-current assets and short-term assets (current assets) of enterprises. In other words, the non-current liabilities of an enterprise may form the fixed assets, intangible assets and long-term equity investment of the enterprise, and may also form the operating current assets of the enterprise.
Non-current liabilities of enterprises are a valuable source of funds, while fixed assets and intangible assets formed by non-current liabilities create conditions for business activities of enterprises. Therefore, in the financial relationship, it is required that the fixed assets and intangible assets formed by non-current liabilities of enterprises must be fully utilized and generate corresponding incremental benefits. Only in this way can the non-current liabilities of enterprises form a benign turnover.
Under the condition that the enterprise's long-term equity investment is driven by non-current liabilities, the enterprise's long-term equity investment must generate investment income, which should correspond to a considerable amount of currency recovery. In this way, the principal and interest of non-current liabilities can be repaid; At some point, the non-current liabilities of enterprises are used to supplement working capital, thus forming current assets. In this case, the quality of corresponding current assets will directly determine the repayment status of non-current liabilities of enterprises.
Whether contingencies will be recognized as liabilities is a subjective judgment to a great extent, so it is inevitable for some enterprises to use this project to manipulate profits. Whether it is suspected of using expected liabilities to manipulate profits depends on other information in the financial report and the historical information of the enterprise.
References:
[1] Lu Mao, Qin Lina. Capital Structure Theory and Capital Structure Optimization [J]. Technology and Market, 20 10( 10).
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