Research On Capital Structure Optimization Of Group A

As China’s economy moves from the high-speed growth stage to the high-quality development stage,it makes the construction industry saturate with the traditional effectiveness which relying on big demolition and construction and driven by debt and scale.The huge pressure of debt on stock assets,the general demand for advances for engineering projects in the industry,and the trust of financial institutions in state-owned enterprises have made the leverage level of state-owned construction enterprises continue to rise.In this context,it is particularly important to optimize the capital structure of enterprises,improve financial flexibility and maximize corporate value.Founded in the 1950s,Group A is a large state-owned construction enterprise in a province with more than 100 participating and holding companies,and its business involves petrochemicals,new energy,municipal infrastructure,rail transportation and so on.Due to a large time lag between the advancement of funds for contracted projects,volume reporting,settlement and payment,the enterprise has a large demand for financing.In addition,there is a certain amount of investment demand around the transformation of the enterprise’s main business,which also puts forward high requirements for choosing financing channels.It is the goal of this paper to analyze the problems and design the implementation path around the current capital structure of Group A.This paper delves into the existing literature and proceeds on the basis of capital structure and its optimization theory.Firstly,analyzing the current status of Group A’s capital structure and identifying their problems:faster growth rate of debt scale,unreasonable debt maturity structure,and relatively single financing channel.Then,making the overall solution design for capital structure optimization of Group A.Focusing on the goal of maximizing enterprise value,the capital structure of Group A is measured in the target interval of static model and dynamic model.It is calculated that the current asset-liability ratio of Group A is 85.76%,and the difference from the optimal value of 60.54%is 25.22%.Then,based on the study of the internal and external influencing factors of Group A’s capital structure and the calculation of the weights of each influencing factor by using the entropy weighting method,also taking the capital required for future scale development and volume improvement of Group A,and the red line control of the State-owned Assets Supervision and Administration Commission and financial institutions into consideration,the target capital structure range of Group A,namely the asset-liability ratio range was finally set at 60.54%to 70%.Based on the target range,we will optimize Group A’s capital structure by focusing on the asset,liability and equity at the same time,and make further determination of the implementation path.Finally,In terms of path implementation guarantee,six measures are listed in this paper:promote from the institution,system,talent,industrial chain,risk control and policy support.The determination of the target range of capital structure optimization of Group A and the design and implementation of the optimization path will provide some inspiration for the subsequent studies in the industry.