High Cash Holdings Diagnosis On KY Company

KY company as a traditional Chinese medicinal materials company,the ongoing integration strategies of private enterprises,is the industry's leading position.Cash holdings constantly in recent years,as of late 2015,the company account money funds have accounted for 41.51% of total assets,attract the attention of investors.According to the traditional financial idea,"cash is not money to make money",a large number of idle cash to KY bring certain negative impact on the company's performance;As market competition intensifying,appeared the "cash is king" point of view.Then the high cash reserves of KY company is to meet the needs of the development of the company's future? Or management inefficient behavior? Enterprise management have noticed this feature? The more the better enterprise whether cash? Enterprise how many cash holding is reasonable has become one of the focuses of the company management and the general investors?In this paper,according to analysis of the status quo-rationality evaluation-mining reason-enlightenment and Suggestions "train of thought of KY company diagnosis to the rationality of the high cash behavior research.From the source of cash holdings,cash holding,impact on corporate profitability these three aspects to analyze the status quo of KY company cash holdings.Found during the process of analysis of the company's operating activities cash inflow quality reduced year by year,large amounts of cash holding is the enterprise through the debt financing borrowed money,and the high cash holdings behavior brought negative impact to profitability.This paper accords with KY company management level is calculated by using the stochastic model of optimal cash holdings holds a reasonable range for 6.735 billion yuan,9.135 billion yuan between,one of the best cash holdings to 7.535 billion yuan.One by one and then to the strategic investment project analysis,calculate the KY company strategic level of cash demand for 2.188 billion yuan.In KY company cash holdings of reasonable interval is 8.923 billion yuan,8.923 billion yuan,and KY company's actual cash holdings to 15.818 billion yuan,judged KY company cash holdings are not reasonable,beyond the part of the cash reserves unnecessary debt financing costs,make the enterprise bear the negative effects on the corporate profitability,which harm the interests of investors.This article from the inventory management,corporate governance,external financing constraints and the analysis of the strategic project implementation from four aspects of KY company appear this kind of irrational behavior with cash,and combining with the diagnostic process and results of this paper to obtain revelation about high diagnosis with cash,and reasonable of KY company about how to strengthen the cash holding improvement Suggestions were put forward.