Financial management problems at present in China and Countermeasures

Abstract: China's accession to WTO has brought changes in the environment of Financial Management, Financial Management, whether caused by our business in a specific investment, financing, income distribution and management of current assets, or Financial Management functions, theories and understanding of both the target there are many problems, which require companies to face these problems, take the necessary measures
Keywords: Financial Management, problems, strategies

A stage of China's Financial Management problems

(1) arbitrary investment decisions in China's enterprises, regardless of their own capabilities and development objectives, interested in new stalls, blind investment, resulting in serious losses abound .2001 February 27, Monkey Group bankruptcy apply in the case of Yichang City Intermediate People's Court. then joined ST A Monkey ranks, it can be said of blind investment and sprawl, a typical case of serious consequences in the management made a series of results, the Monkey King Group introduced the so-called "300" approach: build one hundred companies, opened one hundred shops, one hundred companies out soon, more than 100 group-owned enterprises, and across dozens of industries, its products are the famous Monkey King electrode, but also includes glass bottles, beer, diesel, diesel generators, diamond, and even piano, just all-encompassing. in accordance with international common practice, an investment company during the prior should all investment project feasibility analysis, only considering the various factors based on when the investment income generated by the project's net present value of future and greater than the current cost of investment projects, investment projects that generate net cash flow is positive only worth the investment. Monkey Group expansion and the blind pursuit of the so-called extension-type diversification, without in-depth investigations and studies on investment projects will be chaos, bankruptcy is not surprising. However, such a situation, like the Monkey King Group not uncommon in China's enterprises.

(2) In terms of funding, China's capital market is still underdeveloped, business financing tools are still not abundant. Enterprises in China a long time to understand the capital market is still relatively scarce, the functioning of the capital market, capital market theory, the lack of Research, when funding less consideration of the capital structure and financial risks, with a certain blindness and some listed companies to face up to 90% of the debt ratio indifferent, and even more some of the listed companies is purely for grabbing the money and financing, do not consider what the maximum business value technology, to maximize shareholder value and they shall also take the financing of today's debt yesterday, that tomorrow's today's debt financing shall also led the company's financial situation deteriorate, the ultimate victims are the majority shareholders. Monkey Shares are admitted to listing, the company A senior leader said: "What is the stock market which expert invented? I really thank him for good! ago to borrow money but also has now a market there so much money, how can I spend" it shows ignorance of the capital market.

(3) consider the distribution of income less capital structure on here talking about the income distribution is defined as net based on "distribution according to work" principle of compensation allocated to the enterprise workers outside the distribution of profits. Enterprises within the duration of the profits, between businesses and owners in a certain proportion of the distribution, respectively, the formation of corporate retained earnings and owner's equity. dividend policy affects not only business-related interests of all parties, with the company's financing and capital structure problems are closely related, related to the company's long-term development in China, due to long-term stable development of enterprises, are generally more focus on capital accumulation, rather than tend to result in a cash outflow of corporate cash dividend distribution, more emphasis on the business results that profit targets, and less concerned about the stock price, resulting in income distribution and international practices vary greatly with the widespread international use of dividend policy, China's listed companies are mostly less cash dividends and replace them with the distribution of rights or bonus issue method, which intentionally or unintentionally contributed to the speculative stock market atmosphere, to the detriment of investors to form a sound investment philosophy. Not only that, the dividend policies of China's enterprises are often random, unpredictable changes in policy dividend distribution plan, so Investors at a loss.

(4) liquidity, China's enterprises there are many problems. Liquidity is more than one year in a year or realized within an operating cycle or consumption of assets, including cash, short-term investments, accounts receivable and prepaid models, inventory, etc., which is characterized by mobility, turnover and short in the cash management, China's enterprises often can not determine the ideal balance of cash or cash balances to determine the ideal lack of proper accounting methods, thus affecting the cash flow in cash with general acceptability, the most liquid and profitability weakest, holding too much cash, it will reduce investment income, cash holding is too small, a cash shortage will affect the solvency of even threat to the survival of enterprises in inventory management, China's enterprises tend to hold more inventory, a large amount of inventory reserves. a lot of inventory taking up the majority of companies operating funds, if the company poor sales, business cash flow it difficult to sustain, plus the cost of inventory management to take place reserves, inventory reserves for too long will deteriorate outdated costs, these will worsen the financial situation of enterprises in the accounts receivable management, China's one-sided pursuit of sales, while ignoring the size of accounts receivable status. receivables held by too many companies will reduce the company's operating income, cash flow impact. too much to the enterprise accounts receivable are also a variety of costs such as opportunity cost , administration costs and bad debt losses and other costs. Links to Research Papers Download http://www.hi138.com 2 financial management improvements

(1) changing the stereotypes, the ideological emphasis on the financial management of long time, working with our company's financial accounting has not been well separated, subordinate financial management accounting, "financial management to go along with accounting, accounting followed leadership will go, "Financial Management of content should be limited to working capital management in the financial management of a number of scholars believe that the production management of corporate management to replace the core of today, this situation must change.'s accession to WTO will promote the domestic market and international market standards, the fierce market competition and survival pressures will force enterprises to adjust and change the old management concepts. To this end, companies should form a top-down emphasis on the financial management habits, attention to budget, working capital management, financial control , financial analysis, etc., closely around the target, from an overall grasp of business, enhance corporate financial management level.

(2) to strengthen liquidity management of working capital management, including cash management, inventory management and accounts receivable management, strengthen cash management primarily in the context of relevant state regulations, do the daily balance of payments, accelerate cash flow rate, control the size of cash holdings. for our tradition tend to hold more inventory business, accounting for corporate funds to increase the management costs of the case, our business model can bring in the best order quantity, lead time to strengthen, control of the insurance reserve and reduce inventory costs. modern market economy is essentially a credit economy, credit sales as a mainstream form of inter-enterprise transactions, and thus accounts receivable management is always an important part of financial management. China's enterprises must change to focus only on sales, should be ignored accounts receivable control, enhanced management of accounts receivable in the ordinary course of business focus on the customer's credit investigation, credit analysis and improve the ability to control the size of accounts receivable, to prevent the formation of bad debts.

(3) scientific investment decisions production and operations, such as boat falls behind in the technological advances in the knowledge economy, companies must continuously develop a newer, better, more popular products by customers can be in the market based, if a company can not develop, can not expand their market share, will be mercilessly eliminated.'s development is inseparable from business investment, the investment decision-making is the most critical of all decisions, the most important decision-making, investment decisions of enterprises The biggest mistake, is an important investment decisions tend to make a business in trouble, even bankruptcy. the tendency to avoid blind investment, scientific investment decisions. China's enterprises, mainly to do the following two points: First, you must investment is a clear Economic activity, making investment decisions is to overcome the "political", "interpersonal relationships" and other factors, starting from the objective Economic situation, the decision whether to invest. Second, when making investment decisions, should also improve investment project's budget, to fully take into account the investment risks. make cash flow projections and investment projects and only full account of the time value of money and investment risk is worth the investment decision-making of investment decisions to teach science in order to achieve good benefits.'s accession to WTO on China's enterprises take the country to provide better opportunities in fully prepared investment project budget, a balanced analysis of risks and benefits on the basis of international investment will seize the opportunity to provide a broad business development prospects in the international investment, China's Baosteel, Haier is the first step for the company's sustainable development laid a solid foundation.


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