The Impact Of Financial Flexibility Of Real Estate Industry On Corporate Performance

Financial flexibility refers to the ability of an enterprise based on an uncertain environment to properly allocate financial resources in a timely and low-cost manner to achieve corporate goals.Financial flexibility includes two dimensions:cash flexibility and debt flexibility.The times are unpredictable,and business operations face many uncertainties.Enterprises in this environment can help companies survive the crisis or seize investment opportunities by maintaining cash holdings and controlling the scale of liabilities to cope with rapid environmental changes.Financial flexibility is particularly important for the real estate industry,which is named as the pillar industry of the national economy.Considering government carried out increasingly strict policies,and the real estate companies faced uncertainty which is strengthened.These policies not only greatly affect the sales of real estate enterprises,but also greatly increase the difficulty of financing,which is to restrict the level of financial flexibility.At the same time,the real estate industry itself has the characteristics of large initial investment capital,long capital recovery period and large financial risks,and the demand for financial flexibility is even more urgent.Considering the status of outside and inside the industry,it is essential to enhance financial flexibility,reduce business risks and improve business performance from the perspective of financial flexibility.For the real estate industry,cash flexibility is the ability of enterprises to allocate funds,measured by the proportion of cash;due to the existence of the industry's pre-sale system,the use of interest-bearing debt ratios undertaken by corporate borrowing debts to measure debt flexibility is more in line with industry characteristics..Firstly,this paper analyzes the whole financial flexibility level and financial performance indicators of the real estate industry,and then selects A company as the main analysis object,and collects its financial data from 2014 to 2018 as a research sample.This paper explores the impact of financial flexibility level andfinancial flexibility on firm performance by case study.And the research results show that A company has low financial flexibility level.Under the current financial flexibility level,performance will increase with the increase of financial flexibility.At present,most research papers on financial flexibility are based on the basis of empirical research to explore whether financial flexibility will affect performance,but it fails to establish a financial flexible management standard suitable for enterprises.What's more,now,the real estate industry is in a special period,and this standard is more of pertinency for the goal.This paper takes the relevant data of the top ten enterprises in the A-shares from 2009 to 2018 as a sample,conducts empirical research,further corroborates the positive effect of financial flexibility on performance,and determine the best level of financial flexibility.Establish financial flexible management standards suitable for research objects,and provide guidance for better control of their financial flexibility and performance.This method is not only useful for the example,but also has certain reference significance for other companies of the real estate industry.The innovation of this paper is to adopt a new indicator interest-bearing debt ratio as a calculation index to measure flexible of debt.Firstly,the case analysis method is used to have a preliminary understanding of the case.Then the paper used empirical research and further built a bridge between financial flexibility and performance.Finally,under the best financial flexibility level and the average index of the top ten housing enterprises,the paper developed a financial flexible management standard suitable for the case company.