Debt management refers to the use of creditors' or others' funds by debtors or enterprises in the form of bank credit or commercial credit in order to expand the scale of enterprises and increase their operating ability and competitiveness. Therefore, debt management has naturally become an inevitable choice for every enterprise under the conditions of market economy. However, the debt must be repaid, and the debt management of enterprises must be guaranteed by specific repayment responsibilities and certain solvency, and stress the debt scale, debt structure and debt benefit, otherwise enterprises may fall into a bad debt crisis. Therefore, it is necessary to analyze the advantages and disadvantages of enterprise debt management in order to take measures to prevent and solve it.

Benefits of corporate debt management

-Enterprise debt management can effectively reduce the weighted average cost of capital of enterprises. This influence is mainly reflected in two aspects: on the one hand, for investors, the yield of creditor's rights is fixed, and the principal can generally be recovered at maturity, unless the enterprise is insolvent and liquidated. The risk is smaller than equity investment, the required rate of return is correspondingly lower, and the cost of debt financing is also lower than equity financing. Therefore, the cost of debt capital is lower than equity capital. In addition, debt management can benefit from the "tax reduction effect". Because the interest expense of debt is paid before tax, enterprises can get the benefit of reducing income tax. Under the influence of these two factors, when the total amount of funds is fixed, a certain proportion of debt management can effectively reduce the weighted average capital cost of enterprises.

-Debt management brings "financial leverage effect" to enterprises. Because the interest paid to creditors is a fixed expenditure that has nothing to do with the profit level of enterprises, when the profit rate of enterprises is higher than the cost of debt funds, the income of enterprises will increase to a greater extent, that is, the financial leverage effect. At the same time, enterprises can use their own funds saved by debt to create new profits. Therefore, a certain degree of debt management plays an important role in improving the profitability of enterprises.

-Debt management can enable enterprises to benefit from inflation. In an inflationary environment, the currency depreciates and prices rise, but corporate debt repayment is still based on its book value, regardless of inflation. In this way, the real value of the enterprise's actual repayment is lower than the real value of the borrowed currency, which makes the enterprise gain the benefit of currency depreciation.

-Debt management is conducive to maintaining corporate control. When an enterprise raises funds, if it raises capital by issuing stocks, it will inevitably lead to the dispersion of equity and affect the control right of existing shareholders. Debt financing can increase the source of enterprise funds without affecting the control of enterprises, which is beneficial to the control of existing shareholders.

-Debt management is also an external supervision factor for the company to improve its governance mechanism. Corporate debt is not only a means of financing, but also can reduce the agency cost of shareholders and managers by optimizing the capital structure and introducing the supervision of creditors. In order to ensure the recovery and appreciation of their own capital, creditors will of course pay attention to the operation of enterprises, which will virtually supervise managers, thus reducing the cost of shareholders' supervision of managers. Debt is not only a means of enterprise financing, but also the introduction of external supervision factors to improve corporate governance mechanism.

Risks of debt management

-The negative effect of "financial leverage effect". When enterprises are faced with operational difficulties caused by economic downturn or other reasons, due to the burden of fixed interest, when the profit rate of funds declines, the return rate of investors will decline at a faster rate.

-Bankruptcy risk. For debt management, the enterprise has the legal responsibility to repay the principal and interest when due. If the enterprise can't get the expected rate of return from the capital investment projects raised by debt, or the overall production, operation and financial situation of the enterprise deteriorate, or the short-term capital operation of the enterprise is improper, these factors will not only lead to a sharp drop in the profit of the enterprise, but also make the enterprise face the risk of insolvency. Therefore, enterprises may be short of funds and forced to auction or mortgage assets at low prices.

-Refinancing risk. Due to debt management, the asset-liability ratio of enterprises increases, the degree of guarantee to creditors decreases, and enterprise investors also demand higher returns because of the increased risks of enterprises. As compensation for possible risks, it will greatly increase the cost and difficulty for enterprises to issue loans such as stocks and bonds to raise funds.

How should enterprises be moderately indebted?

-enhance risk awareness, borrow as needed, and do what you can. The fundamental difference between stock funds and borrowed funds is that the borrowed funds are to be repaid. Because of the time interval between debt acquisition and repayment, it is easy for enterprises to borrow money rather than repay it. At present, many enterprises in China are in debt crisis, which is related to people's ideological understanding. Therefore, enterprises should fully consider the following factors when operating with debt:

Macro-economic environment: During the economic recession and depression, enterprises should reduce their liabilities as much as possible, even "zero liabilities", so as to reduce losses and avoid bankruptcy. In the stage of economic prosperity and recovery, the market supply and demand are booming, and enterprises can appropriately increase their liabilities and seize favorable investment opportunities to develop rapidly. In addition, when the government encourages investment, it can appropriately increase the debt ratio and make full use of debt funds for investment operations.

Industry factors: If the operating profit of monopoly enterprises grows steadily, they can appropriately increase the debt ratio, use debt funds to increase production capacity and obtain economies of scale. For example, enterprises in industries with high income tax rate, because debt interest is deducted from pre-tax profits, increasing debt can reduce income tax and appropriately increase the amount of debt. However, for those enterprises that are risky, need a lot of research funds and have a long trial production cycle, it is not appropriate to use debt financing too much.

Enterprise production and operation. Including enterprise scale, variability of enterprise income and profitability of enterprises. The production and operation are in good condition and the product development prospect is broad. The scale of enterprise debt can be appropriately expanded, and the expansion of enterprise scale can decentralize operations and effectively disperse operational risks. Secondly, if the operating income of an enterprise changes too much, it will increase the operating risk of the enterprise and reduce its debt capacity accordingly, and the profitability of the enterprise is the symbol and guarantee of its debt capacity. If the profitability is low, the debt scale is limited.

Solvency. When determining the debt scale of an enterprise, we should analyze its solvency to determine a reasonable debt scale and avoid the risks brought by excessive debt to the enterprise. The solvency indicators of enterprises include short-term solvency analysis, long-term solvency analysis, solvency analysis and cash flow analysis. Enterprises should determine their solvency according to these indicators and borrow accordingly.

-Monitoring liabilities. If there are some bad situations, such as a substantial increase in inventory, a decline in sales, an increase in accounts receivable and an increase in costs, enterprises should pay close attention. For example, inventory includes materials and finished products. In order to avoid or reduce the occurrence of downtime, and for price reasons, enterprises need to store inventory. However, excessive inventory will occupy more funds, and will increase storage costs, insurance premiums, maintenance costs, managers' salaries and other expenses. There is a cost for inventory to occupy funds, which will increase interest expenses and lead to loss of profits. The increase of various expenses will directly lead to the increase of the use cost. In inventory management, we must try our best to pay attention to inventory cost and profit. For accounts receivable, enterprises should take various measures in time to recover them on schedule. Generally speaking, the longer the arrears, the less likely the money will be recovered and the greater the possibility of bad debts. In this regard, enterprises should implement strict supervision and keep abreast of the recovery situation. The supervision of accounts receivable can be carried out through the aging analysis table. Through this table, enterprises can know how many debts are still in the credit period and how many debts have exceeded the credit period. For debts with different arrears, adopt different collection methods and formulate economic and feasible collection policies.

Adjust the financial structure. By adjusting the financial structure, we can avoid the phenomenon of fund mismatch, that is, short-term liabilities are used to buy real estate projects, and medium-and long-term liabilities are used for short-term purposes, so that the loss of non-operating assets of enterprises can be shared, digested and absorbed, and the long-and short-term financial structure of enterprises tends to be reasonable, thus reducing the pressure and risk of due payment, winning time for enterprises, reducing short-term burden, improving and disposing of non-operating assets, expanding product sales and developing new products.

Adjust the business structure. This is the key link of asset reorganization. Because of the debt crisis, especially the serious debt crisis, most enterprises have the problem that too many non-operating assets and products are marketable. Therefore, creditors often require enterprises to adjust their business structure while adjusting their financial structure, because even if creditors make concessions to the term structure or partial debt exemption of enterprises, if they cannot reduce, improve or eliminate non-operating assets without adjusting their business structure, then the future debt repayment obligations of enterprises will not be fulfilled.

Under the condition of modern market economy, debt management is an important way for enterprises to grow and develop rapidly. Let's discuss the financing of corporate debt.

1 General understanding of liabilities

From the point of view of accounting theory, liabilities are debts that can be measured in money and must be paid by assets or services. According to Article 84 of the General Principles of Civil Law, "Debt is a specific relationship of rights and obligations between the parties according to the contract or the law. Creditors have rights and debtors have obligations ". Among them, liabilities have the following properties. (a) the provisions of the scope of responsibility. That is, debt has definite content. The scope of the agreed debt is agreed by both parties, and the legal debt is determined by law or court judgment. (2) the certainty of debt maturity. Debt has a certain term and no permanent obligation. Its meaning includes some disappearing due to the performance of obligations, some disappearing due to the expiration of the time limit, and some disappearing due to the death of the parties. (3) Compulsory debt settlement. Debt is a legal obligation. If the debtor fails to perform his debts in accordance with the law, the creditor has the right to request the court to force him to perform his debts and bear the legal liability for non-performance. Generally speaking, obligation is a kind of responsibility. Responsibility is the guarantee of debt performance, the means for the state to ensure the debt relationship, and the legal consequence of debt non-performance.

Debt management refers to a modern enterprise financing method, which is based on the existing self-owned funds, generates financial demand and cash flow shortage in order to maintain the normal operation of the enterprise, expand the scale of operation and start new business, absorbs funds through bank loans, commercial credit and issuing bonds, and uses the funds to engage in production and business activities, so that the assets of the enterprise are constantly compensated, increased and updated. The specific meaning is: ① The source of funds is the form of borrowing. The ownership of the funds absorbed by banks, non-bank financial institutions, other units and natural persons by means of loans, loans, bond issuance, internal financing, etc. belongs to the creditor, and the debtor only enjoys the right to use within the prescribed time limit and undertakes the obligation to return them on time. ② Liabilities have monetary time value. At maturity, the debtor shall pay certain interest and related expenses in addition to returning the creditor's principal. (3) Borrowing is to make up for the shortage of its own funds, and it is used for production and operation, with the purpose of promoting the development of enterprises. The funds cannot be used for other purposes, let alone wasted at will.

2 Analysis of the advantages and disadvantages of corporate debt management

Debt management is a shortcut to use other people's money to engage in production and business activities in order to obtain the residual profit after paying the borrowing cost, realize the rapid accumulation of capital and accelerate the development of enterprises. A correct understanding of debt management is of great significance to enterprise debt management.

2. 1 Advantages of debt management

2. 1. 1 Debt management can bring leverage to operators. The interest paid by indebted operators to creditors is a fixed expenditure, which has nothing to do with the profit level of enterprises. When the return on total assets of an enterprise changes, it will bring great fluctuations to the income of enterprise owners. This effect is called "financial leverage effect" in financial management. The leverage of liabilities on earnings per share can be expressed by calculating the degree of financial leverage, and the degree of financial leverage (DFL) is the ratio of the percentage change of earnings per share to the percentage change of pre-tax profit. The leverage coefficient can be expressed as:

EFL = (Δ earnings per share/earnings per share)/(Δ ebit/ebit) = ebit/(ebit-i)

Among them, DFL-degree of financial leverage, Δ EPS-change of earnings per share, EPS-earnings per share, Δ ebit-change of pre-tax profit, EPIT-pre-tax interest, and I-paid interest.

This shows that as long as the investment return rate of debt management is greater than the interest rate, enterprises can make profits, and debt management can bring obvious financial leverage effect to enterprises.

2. 1.2 Debt management can make up for the shortage of enterprise management and long-term development funds. In the process of production and operation, there will always be various situations in which funds are needed. It is not only time-barred, but also difficult to meet the needs of its development by relying solely on its own funds accumulated within the enterprise. Therefore, in the case of insufficient funds, debt management can use greater financial strength to expand the scale and economic strength of enterprises and improve their operating efficiency and competitiveness. Enterprises not only need to operate in debt when funds are insufficient, but also need to operate in debt when funds are abundant. Because there are more funds accumulated within an enterprise, the scale of enterprises that rely solely on their own funds and the amount of funds used are always limited. Enterprises can effectively obtain and control more funds through debt, reasonably organize and coordinate the proportion of funds, improve technology and equipment, carry out technological transformation, introduce advanced technology, update equipment, expand the scale of enterprises, broaden the business scope, improve quality of enterprise and enhance the economic strength and competitiveness of enterprises.

2. 1.3 Debt management will not affect the owner's control over the enterprise. In the case of debt management, creditors have no right to participate in the business decision of the enterprise, so it will not affect the control right of the enterprise owner.

2. 1.4 Debt management can save tax. Because according to the current system, debt interest should be included in financial expenses and deducted before income tax, which can save taxes and make enterprises pay less income tax, thus increasing the income of equity capital. The calculation formula of tax saving is: tax saving = interest expenditure × income tax rate. In this way, as long as there is debt capital, it can produce tax saving effect, and the higher the interest expenditure, the greater the tax saving. At the same time, debt management can reduce the capital cost of enterprises. Due to the small investment risk of creditors and the above tax saving effect, the cost of debt capital is usually lower than equity capital. Therefore, the use of debt management can effectively reduce the cost of capital of enterprises, that is, the comprehensive cost of capital, which can be expressed as:

Comprehensive cost of capital = ∑ (the cost of a certain kind of capital × the proportion of this kind of capital in the total capital)

Obviously, when all kinds of capital costs are fixed and the debt capital cost is low, the higher the debt ratio, the lower the comprehensive capital cost.

2. 1.5 Debt management can benefit from inflation. Debt usually cannot be repaid before maturity. In the case of rising inflation rate, the actual purchasing power of the original debt will be reduced, and the enterprise will repay the debt and interest according to the reduced amount, which will actually pass on the consequences of currency depreciation to creditors. Therefore, the greater the proportion of loans in enterprise funds, the more favorable it is for enterprises; The greater the proportion of long-term liabilities, the better for enterprises.

In particular, the loan method, the loan amount and repayment conditions determined through consultation can be resolved through consultation, which has great flexibility.

2.2 Potential risks of debt management

2.2. 1 Increasing liabilities will eventually lead to the cost of financial crisis. Debt increases the pressure on enterprises, because repayment of principal and interest is a contractual obligation that enterprises must undertake. If the enterprise can't repay, it will face financial crisis, increase the cost of the enterprise and reduce the cash flow created by the enterprise. The cost of financial crisis can be divided into direct cost and indirect cost. Direct expenses are the expenses paid when an enterprise goes bankrupt according to law. After an enterprise goes bankrupt, the ownership of its assets will be transferred to creditors, and the legal fees, management fees, attorney fees and consulting fees incurred in this process are all direct costs. The direct cost is obvious, but before declaring bankruptcy, the enterprise may have borne a huge indirect financial crisis cost. For example, because the production capacity and service quality of the enterprise are questioned, the enterprise finally gives up using its products or services; Suppliers can refuse to provide business credit to enterprises; Enterprises may lose a large number of excellent employees. All these indirect costs are not reflected in the direct cash expenditure of enterprises, but the negative impact on enterprises is enormous. And with the increase of corporate debt, this effect will become more and more significant. 2.2.2 Excessive liabilities may lead to agency conflicts between shareholders and creditors. A prerequisite for creditors' interests not to be harmed is that the risk degree of the enterprise should be within the range allowed by the forecast. In real economic life, shareholders often like to invest in high-risk projects. Because if the project is successful, creditors can only get fixed interest and principal, and the remaining high income belongs to shareholders, thus realizing the transfer of wealth from creditors to shareholders; When high-risk projects fail, the losses are shared by shareholders and creditors, and some creditors' losses are far greater than shareholders' losses. This is the so-called "gambling creditors' money". In addition, when an enterprise issues new bonds, it will also harm the interests of the original creditors. Because in order to obtain new funds, shareholders often give new creditors more priority, which can reduce the actual interest rate of new debts. But at the same time, it will also increase the risks borne by the original creditors, leading to the decline of the true value of the original bonds. In order to protect their own interests and limit their own risks to a certain extent, creditors often require that guarantee clauses be added to loan agreements to limit enterprises from increasing high-risk investment opportunities; In order to prevent the issuance of new bonds, creditors will also add a resale clause to the contract, that is, if new bonds are issued, the original bondholders are allowed to resell the securities to the company at face value. This limits the normal investment and financing of enterprises and brings intangible losses to enterprises. Although debt is one of the powerful tools to solve the agency conflict between managers and shareholders, it also deepens the agency conflict between shareholders and creditors. This is two kinds of agency conflict, but there is no doubt that the net agency cost caused by these two kinds of agency conflict always exists, which reduces the enterprise value. Three factors to be considered in reasonable debt

Since debt management is an inevitable choice for the development of modern enterprises, it has both advantages and disadvantages, so how to promote and eliminate disadvantages and strengthen debt management has become the core issue of reasonable and effective debt management.

3. 1 Determine the reasonable debt scale of the enterprise

First of all, the debt scale of an enterprise depends on the degree of recognition between the owner and the creditor. The debt scale is usually expressed by the asset-liability ratio index, and its calculation formula is: asset-liability ratio = total liabilities/total assets × 100%, and the asset-liability ratio is directly related to the safety of enterprise operation. Generally speaking, when the leverage ratio is positive, the more the enterprise borrows, the greater the profit and the higher the capital profit rate. This structure is ideal for owners, because enterprises use other people's money to operate, which increases the rights and interests of owners. But for creditors, the higher the enterprise's asset-liability ratio, the greater the loan risk that creditors bear, so we should try our best to recover our own loans and reduce the loan risk. In this case, it is not only not conducive to enterprises to obtain loans, but also may make it difficult for enterprises to cash flow and affect the safety of enterprises. Therefore, the scale of liabilities is limited, which depends on the degree of recognition between owners and creditors. For general enterprises, it is generally considered that the asset-liability ratio is 30% safe and 40% appropriate. If it exceeds 50%, the capital turnover is difficult, and the creditor will consider not increasing the loan. Secondly, we should also consider the solvency of enterprises. The solvency of an enterprise is expressed by the solvency index. Commonly used short-term solvency indicators are: ① current ratio, that is, the ratio of current assets to current liabilities. The higher the ratio, the more abundant the working capital and the stronger the ability to pay. The current ratio is a representative index to measure the solvency of enterprises. The internationally recognized standard is 2∶ 1. ② Quick ratio, that is, the ratio of quick assets to current liabilities. The general standard is1:1. ③ Accounts receivable turnover rate. Generally speaking, the higher the turnover rate of accounts receivable, the better, and the faster the turnover rate, indicating that the liquidity of funds is good, the quality is high, and the possibility of account loss is small. ④ Inventory turnover rate. The inventory turnover rate is also high, indicating that the acceleration of turnover rate can improve the quality of all working capital and reduce the loss of dull inventory. At the same time, the estimated debt ratio should also consider the following situations: ① sales revenue. Enterprises with higher growth rate of sales revenue can have higher debt ratio. ② Economic cycle fluctuation. Generally speaking, in the stage of economic recession and depression, due to the overall macroeconomic depression, most enterprises should reduce their liabilities as much as possible, or even adopt a "zero debt" strategy; In the stage of economic recovery and prosperity, enterprises can appropriately increase their debts and develop rapidly. ③ Industry competition. The financing of commodity circulation enterprises is mainly to increase inventory, which has a short turnover period and strong liquidity, and its debt level can be relatively high; For those enterprises that need a lot of scientific research expenses and have a particularly long trial period, it is obviously inappropriate to use debt funds too much. (4) Market life cycle of products. If the product is in the growth period of its market life cycle, and the expected return on investment is good, we should appropriately increase the debt ratio, make full use of the financial leverage benefits, form economies of scale as soon as possible, and improve the economic benefits of enterprises; On the other hand, if the product is in recession in its market life cycle, the sales volume will drop sharply. At this time, no matter what the expected investment income of the product is, we should reduce the debt, reduce the scale of production and operation, and prevent the occurrence of operational risks and financial risks. 3.2 determine the appropriate debt structure of enterprises

First, consider the term structure of the borrowed funds. When the total liabilities of an enterprise are fixed, how many current liabilities and how many long-term liabilities can be arranged to make the debt structure of the enterprise reasonable should be considered from the following aspects: ① sales situation, if the sales of the enterprise grow steadily, it can provide stable cash flow and facilitate timely repayment of debts due; On the other hand, if the sales of enterprises shrink or fluctuate greatly, borrowing a lot of short-term debt will bear greater risks. ② Asset structure. Enterprises with a large proportion of long-term assets should use less short-term liabilities and use more long-term liabilities or issue stocks to raise funds; On the other hand, if the proportion of current assets is large, more current liabilities can be used to raise funds. ③ Enterprise scale. The scale of operation has an important influence on the debt structure of enterprises. In countries with developed financial markets, large enterprises have less current liabilities. Because large enterprises can also raise long-term funds in the capital market at a lower cost by issuing bonds, they use less current liabilities. ④ Interest rate status. When the interest rates of long-term liabilities and short-term liabilities are not much different, enterprises generally use long-term liabilities more; On the contrary, it will encourage enterprises to use current liabilities more to reduce the cost of capital. The second is to consider the source structure of borrowed funds. With the liberalization of the capital market, the borrowing mode of enterprises has changed from single borrowing from banks to multi-channel financing. Enterprises can choose to borrow money from banks, issue bonds, borrow money from the capital market and introduce foreign capital according to the loan amount, service life and affordable interest rate. 3.3 Strengthen enterprise management and improve the utilization rate of funds.

After enterprises integrate funds in various ways, the next step is how to manage funds well. This requires: when making investment decisions, we should try to choose projects with less investment, quick results and high returns to ensure the rapid turnover of funds. In raising funds, it should also be based on demand. Excessive or premature borrowing will make funds idle, increase the interest burden and cause waste of funds. Insufficient or delayed borrowing will affect the operation of enterprises and make them lose good business opportunities. Enterprise management should also make overall planning from the aspects of product structure, quality, operation and work efficiency, so as to achieve the best state of enterprise management and improve the utilization rate of funds. 3.4 establish a sense of risk, establish and improve the enterprise financial risk mechanism.

The enterprise financial risk mechanism introduces the internal insurance mechanism into the enterprise, so that the enterprise operators can bear the risk responsibility, exercise the financial risk control right and obtain the risk management income in the fierce competition. For risk takers: ① Require them to establish a correct risk awareness, clarify their responsibilities from the legal and economic aspects, guide operators to be prepared for danger in times of peace, plan carefully, and continuously improve the financial operation of enterprises. (2) Risk-takers should be given certain investment decision-making power, fund raising power and fund distribution power, so that decision-makers can fully consider the changes in the internal and external environment of enterprises and carefully consider the fund raising, use and distribution activities. (3) Make the risk taker enjoy the risk reward, clarify the responsibilities, rights and interests, and mobilize their enthusiasm. In addition, the establishment and improvement of enterprise financial risk mechanism also requires enterprises to distinguish the responsibility of risk and determine the channels for enterprises to compensate for risk losses.