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发表日期:2011-06-14 摄影器材: 点击数: 投票数:

1,2,2 analysis of the negative effects of debt financing

2,2,3 business risks

cash inflows reflects the business realistic solvency. If the business investment decision-making errors or credit policies too broad and can not pay the interest due, companies will face the risk of financing payments. Liquidity of the assets reflects the potential solvency. When the corporate assets of the overall liquidity is strong, highly liquid asset is higher, will be able to timely payment of maturing debt, the financial risk is small; the contrary, when the overall mobility of corporate assets is weak, weak liquidity more assets, the firm may have to face the pressure of debt in a timely manner, the greater the financial risk.

Keywords: debt financing; risk; financial leverage; risk aversion

3,1 establish a correct concept of risk, a risk defense mechanisms

2,1,3 debt maturity structure

(2) excessive debt refinancing weakened the ability of the enterprise.

2,2,2 financial environment

2,1 internal analysis of liability risk financing

(1) Tax Shields.

3,4 the use of financial leverage and reduce risk

debt financing risk is due to market supply and demand of funds, changes in the macroeconomic environment, and the term structure and other factors brought to the enterprise financial results uncertainty. It generally decrease the performance of equity for the enterprise, insolvency, financial difficulty or facing bankruptcy.

3 debt financing of risk prevention measures

1,1 liabilities, the concept of risk financing

 Analysis of Debt Financing Risk Prevention Evaluation Research Papers 
 

1,2 liabilities of the financial effects of funding

company supply, production, marketing and other business activities there is a considerable uncertainty, will give an impact on corporate earnings, therefore operational risks are common. Business risk factors that produce both internal factors and external factors. Such as mode of transport changes, price changes and other risks may cause the supply side; product quality standard, the device will cause the production of accident risk; changes in consumer preferences, marketing decision-making mistakes will bring the risk of sales. Operating in all of these uncertainties will lead to corporate profits or profit margins change, leading to operational risks.

corporate liabilities should be of interest payments, according to the relevant provisions of the accounting system, liabilities, interest expense included in financial expenses, the cost may be tax deductible in the enterprise so that businesses can pay less income tax, to a certain extent, reduce the scale of the actual cost of funding to enable enterprises to access the potential benefits. The formula for calculating tax section: Section Tax = interest expense × tax rate. Thus, as long as the debt capital, can generate tax-saving effect, and higher interest costs, the greater the tax section.

of excessive debt, leading to heavy debt burden. Corporate debt maturity. Debt service in full, if not on a regular basis, will affect the credibility of the enterprise, and then will reduce the fund-raising capacity.

1 Overview of debt financing

financial markets, financial intermediation is the place to debt financing of enterprises by the financial markets. When a company to take short-term loan financing, such as in times of financial crunch, the monetary tightening, debt interest rate rises, it will cause dramatic increase in interest costs, reduced profits or, worse, some companies can not afford rising due Interest expense and bankruptcy liquidation. In addition, financial market interest rates, exchange rate movements, are business financing induced risk factors.

2,2 external debt financing risk analysis

3,3 strengthen financial budget management, select the appropriate financing, term, interest rate

(4) debt financing can reduce the cost of capital.

2,1,2 debt interest rate

Abstract: enterprise funds are a necessary condition for production and business activities, enterprises have to attract capital accumulation and debt financing and equity financing, including debt financing is an important channel for companies to raise funds for has an important influence to promote enterprise development. But the debt financing also brings the risk, so companies should correctly understand the risks of debt financing, enhance risk awareness, the development of effective risk prevention measures.

enterprise debt management, they must ensure that their investment is greater than the cost of capital, otherwise, there will be the phenomenon of income over expenditure. In the case of constant indebtedness, the more losses, with the ability of corporate assets, lower debt, the greater the financial risk. Debt financing due to debt service, if companies can not repay the debt due, corporate debt crisis can occur, and even forced to bankruptcy.

enterprises should strengthen the system construction budget. Maintain a reasonable debt ratio of the premise, based on production and operation and capital investment needs to determine the total demand for funds, reasonable arrangements for its own funds and borrowed funds rate. May, according to the actual situation in their own various means of financing could raise the number of funds, duration, cost and complete the formalities required for the degree of sophistication and other factors. Master fund-raising time in which the financing and the use of time and money into closely together, efforts to reduce the amount of funding the occupation, shorten the production cycle and reduce the payback period of accounts receivable to enable enterprises to take full account of the factors that affect the basis of liability on. Care liabilities. Posed for funding by the risk of changes in interest rates, should carefully study the capital market interest rates based on supply and demand, to grasp its trends, and thus make the appropriate funding arrangements. Period in the interest rate at a high level, financing for as little as possible or only short-term financing for much-needed funds. Interest rates in the transition period from high to low, it should be minimal funding, had to raise the funds should be used way of floating interest rate.

financial leverage is the . Forecasting ROI in corporate debt interest rate is greater than the premise, no matter how much corporate profits before interest and tax, interest on debt are fixed, while EBIT increased, in the same conditions, interest on debt, EBIT the greater the profit, the smaller the coefficient of financial leverage, financial risk also smaller. In contrast, the smaller the profit before interest and tax, the greater the financial leverage, the greater the financial risk. Therefore, companies can increase profit before interest and tax debt ratio and a reasonable arrangement, so that financial leverage is greater than the negative impact of financial risk, so that the gradual growth of earnings per common share. Financial leverage can also be used in conjunction with the operating leverage to reduce risk, operating leverage is to influence change through the sales profit before interest and tax, and financial leverage changes through the profit before interest and tax to earnings per share of common stock. Therefore, the enterprises in the financing decisions, through the rational use of operating leverage and financial leverage to achieve the goal of improving earnings per share. Higher operating leverage for companies to use a lower financial leverage, and lower operating leverage for the company, you can use higher financial leverage.

financing for future development of enterprises depends on the scale of demand for funds. Borrow funds and the ratio of own funds, and the financial benefits and risks are closely related. When the investment profit margin higher than the interest rate, the size enterprises to expand liability, appropriate its own funds and borrowed funds to improve the ratio between the interests of enterprises will increase return on capital; in the investment profit rate is lower than the interest rates, corporate debt The more the proportion of its own funds to borrow funds and the higher the return on capital, the lower corporate interests, business losses or even bankruptcy will occur.

(1) debt financing operations increased financial risk.

2,2,1 expected cash flows and liquidity

(3) debt management can reduce the loss of currency depreciation.

optimal capital structure is the lowest weighted cost of capital, the enterprise value of the largest capital structure of enterprises according to scale of the proposed capital requirements for financing can be a variety of fund-raising, in total funds under the conditions established, a variety of financing the amount of money in different ways to form different capital structure of the program. Financing options were calculated weighted average cost of capital, and then compare them to select the lowest financing programs. Earnings per share analysis is under way under the various funding compared to earnings per share for capital structure decision of a method, which is the use of EPS indifference point for decision-making. No difference in the so-called earnings per share point is equal to make the sale of the two funding programs, ie no difference when the sales level, either by using debt financing, or financing of sovereignty have the same benefits. As expected no difference in point of sales in excess of earnings per share, due to financial leverage is positive, with earnings per share under the debt financing will be higher than the earnings per share under the sovereignty of financing, debt financing at this time can increase the optimization of capital structure.

from the perspective of business loans, debt interest rate is the price paid by the debt financing. Established in the case of liabilities, debt interest and debt rate is proportional to the higher interest rate debt, corporate interest expense to be the more affordable, thereby increasing the financial risk. Meanwhile, the higher interest rate debt, the greater the financial leverage, earnings volatility to shareholders also have a great impact.

References
[1] Qing-Cheng Wang, Wang into the Western financial management [m], Beijing: China Renmin University Press, 2005
[2] Hu Yan helmet, on the financial risk Causes and countermeasures [j], Accounting Research, 2006, (8)
[3] Li Zhiwei, corporate financing choices [j], the vitality of enterprises, 2005, (10)
[4] Gu Qi, Liu Shulian, financial management [m], Dalian: Dongbei University of Finance Press, 2004
[5] James, Van Horn, John, Wachowicz a, Guo Hao translated, the modern enterprise financial management [m], Beijing: Economic Science Press, 2005

in the case of inflation, the use of debt for the expanded reproduction of capital accumulation than for their own expansion reproduction more advantageous. During inflation, continuous depreciation of the currency to repay the funds at the debtors to repay the actual value is smaller than before the inflation, the real purchasing power of the original debt decreased the risk of currency devaluation will be passed on to creditors of the body, reducing the losses caused by inflation.

enterprises in the production and management process, by their own factors and the external environment, cause actual results to deviate from the anticipated results of the situation is difficult to avoid. If the business risk in the event, there is no preparation, lack of response, do nothing, will inevitably lead to failure, so enterprises should establish a correct concept of risk, so precautions against danger, to prevent possible risks, and effective response to risks. Businesses in the Market,tods shoes outlet, should establish a sound risk prevention mechanism and financial information networks, development of specific conditions for enterprise risk aversion program, through reasonable funding structure to spread the risk, the advanced management concept into the business, avoid poor decisions led to the financing risk, the risk minimization. http://www.gwyoo.com

(3) increased debt financing business operating costs of enterprises,herve leger toronto, affecting cash flow.
Arranging debt financing of enterprises will need to pay interest on the one hand increased the operating costs of enterprises, on the other hand if the repayment of the funds are concentrated in the short term requires a lot of money for companies to raise debt,vibram five fingers outlet, it will affect funding turnover and use.

1,2,1 analysis of the positive effect of debt financing

(2) financial leverage effect.

2 the risk of corporate debt financing causes

2,1,1 liability scale

companies to borrow funds needed to repay principal and interest. Since interest is charged at cost and can be pre-tax deduction, which has offset the effect of taxes, can bring tax shield income,Beats By Dre Studio, and equity financing, the government should the individual capital gains to shareholders and dividend income and corporate legal double taxation. Therefore, in general, the debt cost of capital is lower than the cost of equity capital, which will help reduce overall cost of capital.

in corporate capitalization of certain circumstances, pre-tax profits from the interest paid interest on the debt relative to fixed,herve leger sale, pre-tax profits when interest rates increase, then the profits before interest and tax for every dollar debt interest burden on will be reduced, resulting in a profit of equity capital will increase, thus bringing additional income to investors. Quantitative described as: equity capital, net profit = [rate of + return on total assets (total assets, return on a debt interest rate) × debt capital / equity capital] × (1 - tax rate), while return on assets than liabilities, interest rate, appropriate to borrow funds. Can raise equity capital, net profit margin.

3,2 reasonable arrangements for Capital Structure

corporate debt financing in the short-term debt and long-term debt financing costs are different, the general interest on long-term debt will be higher than short-term debt interest. Long-term debt payback period longer than the short-term debt, if the time value of money considerations, and compound interest, the enterprise must be higher interest rates, or capital owners will not lend money out of business. In addition, the proceeds from the use of long-term liabilities with long-term unpredictability and instability, and the company also experienced the long term market risk, a variety of accidents may cause the company to renege on debt service.

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