Research On Shandong Iron And Steel Company Limited Cash Flow Management Based On Value Creation

Cash flow runs through all links of production and operation,it plays an important role in the survival and development of enterprises.It can be said that the sustained,healthy and stable cash flow is the premise and foundation of continuing to create value of enterprises.Currently,the purpose of cash flow management is to continue to create value,this is mainly determined by the nature of capital,at the same time,it is also the inevitable result of environmental change,and is the internal demand of enterprise development and the investors and other stakeholders.In recent years,the international and domestic market demand for steel continued to decline,the serious oversupply of steel production capacity,iron and steel industry entered the pattern of low profit or even loss.Facing the grim situation of industry,some iron and steel enterprises are facing the risk of cash flow shortage.At this time,only to strengthen the cash flow management,improving the efficiency usage of cash,with sufficient and healthy cash flow as a guarantee can enterprises realize the sustained,healthy and stable development,so as to realize the goal of continuing to create value.Based on the above background,this paper selects Shandong Iron and Steel Co.,Ltd.(hereinafter referred to as "Shandong Iron and Steel")as the research object.Based on the discounted cash flow model,capital circulation theory,enterprise life cycle theory and value management theory,discussion on how to manage the cash flow of Shandong iron and steel in order to achieve the goal of sustained value creation.First of all,analysis of the entity free cash flow and the structure of its cash inflow and outflow according to the Shandong Iron and Steel’s balance sheet,income statement and cash flow statement,and select the cash flow indexes from safety,sustainability and profitability three aspects to comparison with the same industry;Secondly,summed up the problems and causes of Shandong Iron and Steel cash flow management,through the analysis can be found,currently the cash flow management of Shandong Iron and Steel is in poor condition,there are problems of cash flow from operating activities insufficient,solvency weak,low earnings quality,it is difficult to achieve the goal of continuing to create value;Finally,aiming at the problems existing in the cash flow management of Shandong Iron and Steel,combined with the internal and external influencing factors of cash flow management based on value creation of Shandong Iron and Steel.Value creation oriented,the improvementmeasures of cash flow management are put forward from improve the cash flow model of centralized management,cash flow strategic management,cash flow process management,cash flow budget management,establish and improve the cash flow risk early warning mechanism and other aspects.Hope that through this study can bring operable suggestions for the problems and deficiencies existing in the cash flow management of Shandong Iron and Steel,maximize the value creation ability of enterprises,it has certain reference meanings for the cash flow management based on value creation of shandong Iron and Steel in the future.