Research, Private Colleges And Universities Based On Cash Flow, Financial Operations Issues

The private universities in China came into being in the early 1980s and developed rapidly in the 1990s. Especially, in 21th century the competition among non-state-run universities are firece. Therefore, some private universities have to close down. The main reason of the Non-state-run university going bankrupt was that the universities were not correctly financed so that it leaded to cash flow exhaustion and caused financial crisis. This article takes Shaanxi M university for an example. Through reviewing the development of the university from its finance, the article summarized the methods of its financial operation. M university was founded in 1990. It mainly depended on leasing some school buildings and some unused areas in enterprises at the early stage. The university developed slowly because of the self accumulation in finance. But depending on years of school-running accumulation, M university won the bank credit funds at the end of 20th century. Thanks to the large-scale investment and construction, the environment of the university improved much more and the university had the stable enrolled students. Overall, in the late 20th century the financial operation in M university was quite successful because of the road of "knowledge learning and scrolling development". Although it had a low level at the begining, it developed steadily. In the 21st century, M university is coming into the rapid development stage. On the basis of the socialized rear service, the university established the industry group and began the collectivized operation. However, due to the family-based management, informal equity, partnership and other reasons, many problems in finance appeared. The following are the main problems:on financing the financing structure is not harmonious and the loan proportion is too much; For the investment, because of the investment of group diversification the investment risks greatly; On the Capital operation the fund allocation is too free and it is hard to keep balance for the major matters decision. In the distribution, the policy is not clear and the investors lacke the confidence. These four aspects caused the following problems:the cash flow in M university fluctuate greatly. The cash flow is threatened persistently and the university will be in the danger of the capital chain rupture.The sources of the danger are mainly in the decision-making. The two countermeasures, "Constructing non-state-run university legal persons jointly governance structure" and "strengthening financial risk prevention efforts", can solve the decision-making risk. After removing the Decision-making risk, M university will return to the education avenue. The countermeasure, "actively promote quality engineering construction", helps the M university obtain the stable enrolled students and stable cash flow. "Optimizing structure of organization and management processes" and "strengthening the budget management", these two countermeasures mainly control the unreasonable cash outflows from the aspects of lowerring the internal friction in management, the reasonable arrangement of cash and using cash without waste. After these five countermeasures of governance, M institute will return to the healthy and orderly development state. In the end the paper points out, behind the operation problems in M college on financing, it shows that the decision makers and operators are too utilitarian and infatuated with financial operation to violate the rule of the education development. Looking forward to the future, the pattern of operating the private universities, such as the high quality, big scale, standardization and specialization, is coming soon.