How to use financial management objectives to promote capital structure optimization

<> "Good afternoon, friends, regarding the current situation of the financial management objectives you mentioned and the optimization of the capital structure of Jiaoyuan, the current foreign research mainly focuses on two aspects: first, the selection and realization of financial management objectives, including profit maximization, shareholder wealth maximization, etc.; The second is the optimization of capital structure and the analysis of group behavior of business decision-making. Among them, some preliminary studies show that maximizing shareholder wealth is one of the most desirable goals of enterprises, and the optimization of capital structure is essential for the long-term development of enterprises.

<> recent years, more and more studies have shown that achieving a reasonable capital structure is one of the keys to the long-term success of enterprises, which can help enterprises obtain sufficient capital support, reduce costs, increase returns, etc. At the same time, for enterprises in different industries, there are also differences in the optimization of capital structure, and the specific capital structure needs to be determined according to the characteristics of enterprises and market demand. In general, the selection of financial management objectives and the optimization of capital structure have an important impact on the strategic planning and implementation of enterprises.

For professionals in the workplace, it is necessary to understand the relevant theories and practices, and to grasp the trends and changes in a timely manner. <>

Hello dear, there are two points in total: the first is a "low-tech" technique. It only investigates which of the companies in a similar industry determine the amount of borrowing.

In general, the best way to accomplish this is to compare the average of the percentage of companies in the industry of interest (financial ratios). The second common method is called financial planning. It simply requires a detailed reconciliation of the company's future cash flow expectations, including those of the debt standby options under consideration, to select the best financing method.

Corporate financial planners are able to (often using a computer) to model the company's future cash flows and financial statements, so they will ask a range of questions that may arise about the planning model. These questions will take into account all conceivable ways of financing and a series of reasonable economic conditions (including product demand, cost, etc.).

Summary. Briefly describe the objectives of financial management and the corresponding capital structure decision-making methods: The goal of financial management is to maximize the value of the enterprise or the wealth of shareholders. The goal of financial management is to achieve the purpose of organizing financial activities and handling financial relationships in a specific financial environment.

The more representative financial management objectives are mainly as follows: maximizing corporate profits, maximizing corporate value, and maximizing earnings per share. Maximizing corporate value should be the optimal goal of financial management.

Briefly describe the objectives of financial management and the corresponding capital structure decision-making methods: The goal of financial management is to maximize the value of the enterprise or the wealth of shareholders. The purpose of financial management is to achieve the purpose of organizing financial activities and handling financial relations in a specific financial environment. The representative financial management objectives of Xunhao mainly include the following views:

Maximize corporate profits, maximize corporate value, and maximize earnings per share. Maximizing corporate value should be the optimal goal of financial management.

The value of a business lies in the fact that it will reward the owner in the future. In layman's terms, enterprise value is how much a business is worth. The enterprise value of Jiansheng is different from that of Liliang Shourun, where profit is only a part of the newly created value, and enterprise value includes not only the newly created value, but also the potential or expected profitability.

From the basic principles of financial management, it can be seen that financial management objectives are affected by the return on investment and risk. Rewards and risks fluctuate in direct proportionality, and the greater the rewards received, the greater the risks taken. The increase in risk will affect the survival and profitability of the enterprise.

Therefore, the value of an enterprise can only be maximized when its reward and risk are well balanced.

Because of the difference in capital structure, there will be differences in the financial risk of the enterprise and the cost of financing.

In the management of an enterprise, the capital structure needs to be paid attention to in order to understand the financial risk and cost of capital. There is no difference in this earnings per share, so it is said that there are now two financing methods to borrow money or issue ** to raise funds, and first calculate the EBIT of earnings per share when the two financing methods are equal. If the expected EBIT is greater than the above, and the calculated EBIT is called the pre-tax profit, then debt financing is used.

The preparation for the 2017 intermediate accounting title has now entered the review stage, and the intermediate accounting title exam column shares the knowledge points of "intermediate accounting "financial management": capital structure optimization", hoping to help you bother you!

Intermediate Accounting "Financial Management" Knowledge Points: Optimization of Capital Clustering and Structure

1. Earnings per share analysis

Methodology: The method of undifferentiated points of earnings per share is carried out using the undifferentiated points of earnings per share. The so-called undifferentiated EPS refers to the level of earnings per share that is not affected by the financing method (it can also be expressed as the level of sales revenue). Based on the non-difference point in earnings per share, it is possible to analyze and determine what kind of capital structure is suitable for the EBIT profit level.

When the amount of capital required by the enterprise is large, it may use a combination of financing methods to raise funds. In this case, it is necessary to compare and analyze in detail the cost of capital burden under various portfolio financing methods and their impact on earnings per share, and choose the financing method with the highest earnings per share.

2. Average cost of capital comparison method

The average cost of capital comparison method is to calculate and compare the average cost of capital of various possible financing combination options, and select the option with the lowest average cost of capital ratio. That is, a capital structure that can reduce the average cost of capital is a reasonable capital structure. This approach focuses on the optimal analysis of the financing plan and capital structure from the perspective of capital investors.

3. Company value analysis

Both methods are based on the analysis of capital structure optimization from the perspective of book value, without taking into account market reaction, i.e., without considering risk factors. The company value analysis method is to optimize the capital structure based on the market value of the company on the basis of considering the market risk. That is, the capital structure that can enhance the value of the company is a reasonable capital structure.

This method is mainly used to adjust the existing capital structure, and is suitable for the optimization analysis of the capital structure of listed companies with large capital scale. At the same time, the average cost of capital ratio of a company is also the lowest under the capital structure where the company is most valuable.

1. Under the condition of optimal capital structure, the enterprise value of listed companies is maximized. At any given time, a listed company has a unique capital structure, but if the capital structure at that time is not optimal, the enterprise value at this time is not maximized. Only under the condition of optimal capital structure can the enterprise value of listed companies be maximized.

2. The optimal capital structure is dynamic. The optimal capital structure is not fixed because the optimal capital structure varies from time to time, and the capital structure is different from time to time.

Just because the optimal capital structure has been achieved in the previous period, it cannot be assumed that the capital structure of the current period is also optimal, so the pursuit of the optimal capital structure is not achieved overnight, but is a long-term and continuous optimization process. Many factors that affect the capital structure are variables, and even if the total amount of capital remains the same, the company cannot respond to the changes with the same capital structure.

3. The optimal capital structure has a high degree of deformation. There are many factors that affect the optimal capital structure, including not only the company's own factors, but also have a close relationship with macroeconomic and capital market factors, and the change of any one of these factors will have an impact on the optimal capital structure, resulting in the change of the optimal capital structure.

Since many factors affecting the optimal capital structure are uncontrollable, when these uncontrollable factors change, it will inevitably lead to the change of the optimal capital structure, so that the optimal capital structure is highly deformable.

4. The complexity and variability of the optimal capital structure. The optimal capital structure varies from company to company, from time to time, and from environment to environment, and there is no single optimal capital structure that is constant for all enterprises, all periods, and all conditions.

Financing theory is the first of the three major areas of financial management. The aim is to minimize corporate financing costs. That is, to raise the same amount of money at the lowest cost.

An optimal capital structure is a concrete way to achieve this. Therefore, financial managers must pay attention to the capital structure.