Evaluation And Optimization Of SW Company’s Financing Structure

From "Tenth Five" to "Eleventh five" planning period, construction machinery industry has a rapid development for ten golden years for the national expanding the scale of infrastructure investment, which brings leap opportunities to small and medium enterprises (in short of’SMEs’) in the industry. However, with the outbreak of the financial crisis in2008, fixed assets in domestic investment, especially the real estate, have suppressed by the macroscopic policy. Besides after the hyper stimulation for4trillion investments in2009to2010, infrastructure-related industries are all entering to the winter period. Sales of construction machinery industry finally began to suffer a cliff-style decline in May2011which results in most of engineering machinery manufacturer’s sales revenue shrinking high, inventories and account receivables rising sharply, so companies have difficulties in operations because of lacking funds. With the above reasons, SMEs in the construction machinery industry is eager for financing, but due to the lack of fixed assets, low credit rating, imperfect financial regulation, effective financing is very difficult.SW company, as one of the small-scale companies in construction machinery industry, also needs to optimize the financing structure. In the past five years, there are two main financing ways for the financing structure, one is the bank loan financing, which accounts for36.37%, the other is commercial credit financing, which is for22.86%. Both of the two financing methods are short-term debt financial. In some circumstances, the company’s fixed assets investment capital takes up too much funds, so short-term financing using for long-term investment become the largest financial risks now. Through the analysis of the company’s financial position, writer thinks that SW company’s financing structure is over-reliance on debt financing. In order to reduce the financial cost and financing risk, SW company needs to optimize and upgrade financial ratios and find multiple ways to improve financing structure proportion distribution. This text introduces the system of financial structure theory, on the basis of detail analysis for some aspects of SW financing structure such as financing requirements, financing methods, financing costs and financing risks, writer also points out some problems for SW company, which are unclear financing tactics, non-smooth financing channels, irrational financial structures, imperfect financing risk systems and so on. According to the problems, SW company should optimize current situations through financing channels, the scale for financing and conditions for financing. Finally, writer works out four implementation strategies to solve the financing problems:First, to enhance the quality of the financing subject; second, to broaden the channels of financing; third, to strengthen the financing risk awareness; last, to reduce the financing costs.