Large Hydropower Enterprise Liability Management

More and more big hydropower enterprises are busing in developing the subsequent hydropower projects in China. More and more liability the big hydropower enterprises without abundant fund will owe. The liability management of the big hydropower enterprises is very important accordingly. There are some rules in the management, such as cost-return rule, risk be controllable and forecast the key factors. When the managers make the financing plan, they should forecast the financial status of the future and estimate the rationality of the capital structure. Then they should analyze the various debts' cost and risk. For the big hydropower enterprises in china, it is viable to finance by bonds or international financing. It is important to create competition in the financing in order to lessen the cost of debt and get more useful financial services from the banks or other financial institutions. Besides the above mentioned, it is necessary to use the special strength of the special banks such as the State Development Bank. In order to lessen the risk, sponsors should finance by project financing for some subjects. In the process of the traditional financing, it is so vital to forecast the domestic and the international financial markets' change that the firms can lessen the interest risk and the foreign exchange rate risk of the debt. When the project is finished, the debts of big hydropower enterprises will still remain for many years. During the period, the enterprises should choose more short-term liability so that decrease the financial cost. Managers should choose a proper amount of short-term liability by estimate the current asset and the cash flow rather than traditional ratio such as liquidity ratios, quick, or acid test, ratio. And it is the managers' main duty to adjust the capital structure especially the debts' structure according to the enterprises' financial status and the domestic andinternational financial market so that lessen the financial cost and risk. In the process of adjust the debts' structure, the manager will cognize that a good relationship between the enterprises and the banks is a basis. The enterprises should make a stratagem alliance with the banks, get professional suggestion or consultation services from the financial institutes and ensure the adjustment successful. In the future, the interest rate and the foreign exchange rate will be determined by the market, there will be more methods and tools for the hydropower enterprises to lessen its financial cost and risk.