[Keywords:] enterprise financial risk management, capital structure, financial leverage
First, the operating status and financial risks faced by SMEs
In the 1980s and 1990s, China's small and medium-sized enterprises sprang up like mushrooms after rain, forming a boom in the development of small and medium-sized enterprises, which greatly promoted China's economic development. With the reform of China's economic system and the development of the economic situation, small and medium-sized enterprises began to step down from the glorious altar. Due to China's unique economic system and the defects of small and medium-sized enterprises, the development of small and medium-sized enterprises is facing many insurmountable economic and institutional problems, and the financial risk of small and medium-sized enterprises is the primary problem, so it is urgent to study how to manage the financial risk of small and medium-sized enterprises.
According to the existing conventional statistics in China, in the capital source structure table of enterprises above designated size in 2003, it can be found that many small and medium-sized enterprises have serious financial problems. Generally speaking, the current liabilities of SMEs are 49. 1%, the long-term liabilities are 1 1.4%, the owners' equity is 39.5%, the asset-liability ratio is 60.5%, and the current debt ratio is 866. (Source: Statistical Yearbook of China 1999-2006)
In 2004, the International Finance Corporation of the World Bank investigated the sources of capital structure of SMEs in three cities in China and Sichuan. The results show that most of the funds raised by SMEs rely on their own accumulation and bank loans, but only a few other funds, such as commercial credit and informal financing. A questionnaire survey conducted by Shanghai Branch of the People's Bank of China on more than 300 small and medium-sized enterprises in Zhejiang and Fujian provinces shows that bank loans account for more than 60% of the external financing of enterprises, and the larger the scale of enterprises, the higher the proportion of bank loans; Only a few enterprises have used private loans. A survey conducted by Wuhan Branch of the People's Bank of China on small and medium-sized enterprises in three provinces and five cities 128 shows that among the sources of net assets, all kinds of loans exceed 50%, of which bank loans account for more than 94% of all loans; Bank loans account for 60% of the total debts of enterprises, and equity financing only accounts for 17%. (Data and information come from Ying, the financing status and policy analysis of small and medium-sized enterprises in China)
To sum up, we can roughly outline the financial situation of small and medium-sized enterprises: small and medium-sized enterprises generally face the dilemma of narrow financing channels and difficult financing; Bank loan is the most important external financing channel for enterprises, but banks rarely provide long-term credit; At the same time, small and medium-sized enterprises generally lack long-term stable sources of funds, which not only benefit from limited sources of funds but also are difficult to obtain long-term debt support; At the same time, SMEs generally have a high asset-liability ratio, which shows that most SMEs have serious debt risks.
Second, the causes of financial risk analysis of SMEs
There are many factors that cause the financial risks of small and medium-sized enterprises, including the external environmental reasons of the policy system, the internal reasons of the structure and operators of small and medium-sized enterprises, which lead to two categories: unsystematic risks and systematic risks.
(A) external reasons
External risks affect all the value forms regarded as the carrier of capital value, such as physical assets, monetary assets, creditor's rights assets and even the enterprise itself as the representative of total assets. It is the inevitable financial risk in the process of financial management through risk. Because there is no effective way to eliminate systemic risk, it is also called "undivided risk". In China's current financial system, most large commercial banks aim at big customers in big cities, while small banks or credit institutions also focus on the big market and ignore the small and medium-sized enterprise market. Moreover, China's securities market and financial system are not perfect and mature, which makes it more difficult for enterprises to raise funds.
(2) Internal reasons
1. In reality, banks usually consider the following four points when lending to SMEs:
(1) The operation of small and medium-sized enterprises is easily affected by the external environment, with large survival variables, easy to be affected by the operating environment, easy to close down and high loan risk; (2) Small and medium-sized enterprises are generally small in scale, with few assets, poor liquidity and limited debt capacity; (3) Small-and-medium-sized enterprises' capital demand is high at one time, which leads to increased financing complexity and high financing cost and price; (4) Information transparency is extremely low, which leads to serious information asymmetry with financial institutions. These factors lead to the high financing cost of SMEs.
2. The internal reasons of small and medium-sized enterprises are mostly caused by improper decision-making, such as improper financing scale, improper capital source structure, improper financing mode and timing, and improper credit trading strategy, which leads to inefficient use of funds, serious capital loss and inadequate security and integrity of funds. At the same time, the investment of enterprises is not feasible and subjective, which leads to high financing cost, waste of a lot of money and aggravation of enterprise risks. The financial management system of small and medium-sized enterprises is short of excellent financial management talents, which is a great threat to enterprises.
Third, the theoretical analysis of enterprise financial risk
In order to get rid of this financial risk caused by internal reasons, enterprises must pay attention to their capital structure and financial leverage. Enterprise capital structure refers to the proportion of equity funds and debt funds in the source of enterprise funds. The debt funds of an enterprise can be leveraged by using the difference between the investment yield and the debt interest rate. Debt management is universal and necessary in modern enterprises. Making good use of debt and the leverage it brings is of great significance to the development of enterprises.
(A) financial leverage and financial leverage.
Financial leverage is the use of debt financing by enterprises when formulating capital structure. In reality, as long as the investment return rate of an enterprise is higher than the debt interest rate, the profit of the debt part invested by the enterprise will be higher than the interest in the same period, and there will be savings after paying the interest, which will increase the absolute value of capital gains due to debt management, thus making the equity rate higher than the investment return rate. The higher the property right ratio (debt funds/equity capital), the greater the financial leverage income, which will bring more benefits to the enterprise and also improve the rights and interests of the enterprise, rate of return on capital. Therefore, the essence of financial leverage benefit is that the return on investment of enterprises is greater than the interest rate of liabilities, and part of the profits obtained from liabilities are converted into equity funds, thus increasing the return on equity funds. If the rate of return on investment is equal to or less than the interest rate of debt, then the profit generated by debt can only or cannot cover the information needed by debt, and even the profit obtained by using equity funds is not enough to cover interest, so we have to reduce equity capital to compensate, which is the essence of financial leverage loss.
The financial leverage of liabilities is usually measured by the degree of financial leverage, which refers to the multiple of the change rate of equity capital relative to pre-tax profit, and its theoretical formula is:
Degree of financial leverage = return on equity capital/change rate of income before interest and tax.
After mathematical deformation, the formula can be changed into:
Degree of financial leverage = earnings before interest and tax/(ratio of interest and tax rate to pre-tax debt × interest rate)
According to these two formulas, the degree of financial leverage is calculated. The latter reveals the relationship among debt ratio, income before interest and tax and debt interest rate, which comprehensively determines the degree of financial leverage. The former can reflect that the change of yield in sovereign capital is equivalent to the change multiple of pre-tax profit. Since the debt interest is paid by the enterprise before tax, the enterprise can not only improve the return rate of equity funds, but also make the return rate of equity funds lower than the pre-tax profit rate.
(B) Analysis of financial risk factors
Enterprise financial risk is the interest rate payment and risk of debt caused by the interest of debt funds borne by sovereign funds under the uncertainty of future income. Financial risk mainly depends on the level of financial leverage. In general, the greater the degree of financial leverage, the greater the elasticity of sovereign capital return on earnings before interest and tax, and the greater the risk; On the contrary, the smaller the financial risk. Therefore, enterprises must pay attention to the following problems in order to control and avoid risks when operating in debt.
1. Interest rate before interest and tax. It can be seen from the above two formulas that the higher the profit rate before interest and tax, the smaller the degree of financial leverage, and vice versa. In other words, when the pre-tax profit rate of investment projects is high, enterprises will get more returns or investment income, so enterprises must proceed from reality, deeply understand investment projects and objectively expect profits to determine the best investment plan.
2. Debt interest rate. As can be seen from the above two formulas, the higher the ratio of earnings before interest and tax to liabilities, the greater the degree of financial leverage, and the smaller the degree of financial leverage, that is, the lower the responsible interest, and the corresponding increase in the rate of return on sovereign capital. This is because under the condition of fixed pre-tax profit and debt interest rate, the profits obtained by enterprises from debt funds and sovereign funds are fixed. The lower the debt interest rate, the less the interest paid by the enterprise, and the more the corresponding enterprise profits.
3. Capital structure. The ratio of debt to total capital is also one of the factors that affect financial leverage and financial risk. When the pre-tax profit rate and debt interest rate are fixed, the higher the debt ratio, the greater the degree of financial leverage, and vice versa. However, the debt ratio is different from the debt interest rate and pre-tax profit rate, and it has positive and negative effects on the return on sovereign capital. When the pre-tax profit rate is greater than the debt interest rate, it has a positive impact, and vice versa.
Fourth, the financial risk management measures for SMEs
How to deal with the risks faced by small and medium-sized enterprises, the financial risk management of small and medium-sized enterprises has become increasingly prominent. The risk management of small and medium-sized enterprises can start from two aspects: on the one hand, adjust the capital structure and financing policy of enterprises and establish a risk management system; On the other hand, strengthen the quality of enterprise personnel and enhance decision-making ability.
(A) the establishment of a risk management system
1. Improve the scientific level of financial decision-making and prevent financial risks caused by decision-making mistakes.
2. Predict the capital demand reasonably according to the production and operation situation, and then choose the correct financing method through the calculation and analysis of the capital cost. Determine a reasonable capital structure, make full use of leverage, raise funds in various ways, broaden financing channels, diversify financing methods and disperse financing risks.
3. Pay attention to investment decisions. Investment decision is one of the business decisions of enterprises, which directly affects the capital structure. We must do a good job in the feasibility analysis, expected return on investment and debt interest rate of investment projects.
4. Establish a risk fund guarantee system to ensure the stability of the capital structure in operation and improve the enterprise's resilience and short-term solvency.
5. Establish a supervision system for the efficiency of capital use.
6. Establish a financial prevention mechanism and correctly grasp the degree of debt management of enterprises. When making decisions on debt management, enterprises should first consider the scale and solvency of enterprises, be alert to the negative effects of financial leverage, guard against financial risks and pay attention to cost constraints, and pay attention to the joint use of financial leverage and operating leverage.
(two) to increase the training of enterprise financial and management personnel, improve the financial system.
1. Improve the risk awareness of financial personnel.
Financial risks exist objectively. As long as there is financial activity, there must be financial risks. In practical work, the financial managers of many enterprises in China lack risk awareness, thinking that as long as the funds are well managed, financial risks will not occur, and the lack of risk awareness is an important reason for financial risks.
2. Strengthen supervision.
Enterprises should formulate corresponding risk management strategies to reduce the degree of harm according to the causes and processes of risk signals such as product backlog, declining quality, increasing accounts receivable and rising costs. In the face of financial risks, we usually adopt strategies such as avoiding risks, controlling risks, accepting risks and dispersing risks.
3. Improve the financial system
Establish a long-term financial early warning system, in which profitability, solvency, economic benefits, development potential and other indicators are the most representative. Asset profitability indicators include return on total assets and cost profit rate. The former represents the profit level per yuan of capital and reflects the profit level of enterprises using assets; The latter reflects the profit per dollar spent. The higher the index, the stronger the profitability of the enterprise. Liquidity indicators include current ratio and asset-liability ratio. If the current ratio is too high, it will make the working capital lose the opportunity of reinvestment, and it is best for general productive enterprises to be around 2; The asset-liability ratio is generally 40% to 60%. When the return on investment is greater than the loan interest rate, the more loans, the more profits and the greater financial risks. The profitability and solvency of assets are two major parts of enterprise financial evaluation. The level of economic benefits directly reflects the management level of enterprises. Among them, the indicators reflecting asset operation ability include accounts receivable turnover rate and production and sales balance rate.
Verb (abbreviation of verb) conclusion
China's small and medium-sized enterprises develop late and are still very young, so it is inevitable that they will encounter difficulties on the road of development. However, this paper believes that the development of small and medium-sized enterprises in China should pay attention to reality, strengthen risk awareness, mainly use financial leverage, adjust capital structure, accumulate continuously, strengthen risk management of financing, investment, capital recovery and income distribution, and maximize enterprise benefits.
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