Corporate financial analysis of sustainable growth management strategy

[Abstract] into the 21st century, in order to achieve the sustainable development of the national economy, economic and social micro-enterprises as the main body must be financially sustainable competitive advantage and achieve sustainable financial growth. Based on the analysis of the financial model of sustainable growth, have raised a high-speed growth and low growth scenario, the corporate finance sustainable growth strategy.

[Keywords] sustainable financial growth, growth strategies, financial resources

1 Introduction

With the continuous deepening of China's reform and opening up, the establishment of market economy, China's gradual farewell to the "shortage economy" era, into a buyer's market, the increasingly fierce market competition to promote increased awareness of China's business market. Attention to market demand, "to market ability" to increase sales revenue, the "big cake" has become the goal of most companies continue to pursue In addition, investors in recent years, China's pursuit of high-growth stocks continues to heat up, leading to market sales growth for the company's management a clear preference. managers to meet sales growth in favor of bring banks, the Government's attention, the media sought after, but ignored the company's potential financial crisis and crisis management. may easily lead to rapid growth in bankruptcy, "three" is a vivid example.

In the company's overall resources are limited, the blind pursuit of expansion, the expansion of assets, sales growth, the result is not necessarily an increase in corporate value, but may significantly reduce the cash flow, resulting in lower operating capacity and solvency, making companies in trouble. the financial resources, capabilities and information management to achieve sustainable growth of the financial foundation to achieve financial sustainability business growth, we must have a certain amount of financial resources, capabilities and information of financial resources the number of how many, directly determines the maximum growth rate of financial sustainability, corporate finance activity of the strength of behavior, affect the effectiveness of financial resources to play, and ultimately affect the financial sustainable growth rate, the financial integrity of the information, timeliness and transparency is to ensure that corporate financial decision-making activities, a prerequisite for the proper, therefore, enterprises should take full account of growth management in the financial resource constraints for enterprise growth and insufficient growth to take over the appropriate financial strategy to ensure the healthy and steady development.


2 content and the financial model of sustainable growth

Sustainable growth of the financial research is the most representative of the Higgins model of financial sustainability Higgins is the first systematic study of growth theory, one of the academics, from the financial perspective of the sustainable growth rate connotation defined Higgins pointed out that the company's sustainable growth rate is not exhausted in its financial resources, enterprises are able to increase sales of the maximum rate which is a comprehensive financial indicators, reflected in the existing business business management and financial policies has the ability to grow under The model is relatively simple and easy to understand its model assumptions are: ① the company intended to market conditions and growth rates allowed under the same growth rate, ② managers can not and do not want to offer new shares, ③ the company intends to continue to maintain a target capital structure and dividend policy goals.

Sustainable growth rate = [SX (] end shareholders' equity - beginning shareholders' equity [] opening stockholders' equity [SX)] =
Sales margin × Total assets turnover rate × × retained earnings end of the beginning total assets of equity multiplier
The idea of ​​sustainable growth, not to say that business growth can not be higher or lower than the sustainable growth rate. The problem is that management must be addressed in advance and the company is expected to or below the sustainable rate of growth over time caused by financial problems. Any business sales growth should be controlled, so that with the financial ability to balance, rather than blindly follow the market, although the business has grown faster or slower, but in the long term sustainable growth rate is always subject to the constraints, is sustainable growth rate as the sustainable growth of the financial control standards.


3 Financial analysis of sustainable growth strategy

From the above model, we can see the financial impact of policies and operational efficiency is an important financial factor for sustainable growth, we can consider these factors to develop appropriate financial strategies. Finance sustainable growth rate can be regarded as produce a set of balanced growth in all growth - income portfolios, and financial issues of sustainable growth is to adjust the imbalance in growth caused by the surplus or deficit, adjusted for differences in growth rates. Sustainable growth can be seen that the use of financial models for financial analysis and planning, it is not the guiding ideology of "continuous improvement", but rather a balanced, sustainable growth that financial growth is consistent with the actual, which form the so-called growth management strategy paper in growth management policy proposals to Professor Zhang Xianzhi in growth management on the core business based on the idea proposed accordance with its subject, the paper that growth management should be "three steps": First, with the external environment and within the actual situation, a comprehensive analysis of corporate sustainable growth rate of various factors (including factors affecting the sustainable growth rate of the macroeconomic environment, industry factors, profitability, core competitiveness and the life cycle, etc.) Second, according to sustainable growth rate analysis of various factors, develop business growth targets for next year, and with this year's sustainable growth rate compared to determine growth or a slow growth speed. 3 is based on results of this comparison, prior to take measures to achieve business growth targets.

3.1 the growth strategy for speeding
For the excessive growth of the company, can take one of the following financial strategies, or some combination of:

Links to free download http://www.hi138.com (1) rights issue of new shares to provide funding when a company willing and able to increase market shares in the capital, sustainable growth of its financial problems can be eliminated, additional equity capital and use of financial leverage to increase the borrowing capacity will provide companies with sufficient capital for development. and with a higher proportion of equity capital, capital structure while maintaining the same circumstances, companies can increase the liabilities, which are growth of the company's cash resources.

(2) reduce the dividend payout ratio, retain more profit in the enterprise. Dividends paid to shareholders of retained earnings and corporate existence of the shift in the relationship, reduce the dividend distribution, will increase retained earnings, thereby increasing the supply of funds. However, the biggest limitation of this strategy is that companies have a maximum rate of retained earnings (100% rate of retained earnings), dividends are usually paid on the interest of shareholders and the investment opportunities they feel the company into a change in the opposite direction, if the company's investment opportunity can not guarantee a satisfactory return to shareholders to reduce the dividend payout ratio will feel angry, causing stock prices.

(3) improve the debt ratio. Strong and profitable business faster asset turnover, financial sustainability in the growth rate of real growth rate greater than can be appropriate to improve the asset-liability ratio, debt ratio is already high for the company, obtain equity financing may be a better financing.

(4) to optimize the economic resources of corporate assets, improve asset turnover. When the company's operational efficiency in the existing policy of funding and financial support of the sales growth in difficult circumstances, the economic resources to optimize business structure, to speed up the turnover rate of assets is an effective way to solve the lack of funds. optimize enterprise assets are economic resources to optimize the allocation of resources and means of non-core divestitures. a company of limited resources, while in many areas can not create a strong competitive ability, and sometimes can only act as a follower , makes the company's resources can not play the best effect when resources scattered in many different areas and can not carry out effective competition, as second-class role in the business at greater risk, so, withdraw the funds into the company's core business up , a "non-core divestitures," can be used to solve the growing problem through non-core divestitures generate excess cash to support growth, reduce the number of low-quality sales to control growth and improve asset turnover.

3.2 low growth strategy
For the slow growth of the company, can take one of the following financial strategies, or some combination of:
(1) through acquisition or investment, seek more investment opportunities, make full use of excess funds.'s Lack of growth, it means that the company management did not make full use of existing financial resources if a purchaser to buy the company, then it can more effectively reconfigure the target company's resources, and in the process to obtain huge profits, while improving its sustainable growth rate after the acquisition of addition can also purchase up to solve the problem of inadequate growth, usually the practice, management excess cash flow to invest in other industries engaged in production and business diversification of production, they have planned in other more dynamic sectors in search of valuable growth opportunities through market research companies can determine the appropriate use of new projects to do investment, one can reduce the waste of liquidity, by investing in two new projects, you can find the new development projects.

(2) stock repurchases increase earnings per share and enhance control of the stock repurchase is a stock company after shareholders approved the use of accumulated surplus funds or funds derived from outside the company financing the purchase price in accordance with certain of our outstanding shares as treasury shares or a capital operation to be canceled behavior stock repurchase to reduce the number of shares outstanding, earnings per share corresponding increase in price-earnings ratios, thus promoting an increase or maintain a reasonable stock price.

(3) payment of dividends, to reduce the excessive retention of funds from the theory, when sales growth is less than the sustainable growth rate, the extra cash these companies in the state, can increase the dividend to reduce capital accumulation, but in implementation of this strategy managers need to consider tax factors and preferences of factors, managers tend to prefer because of its growth strategy and maintain this resistance, because the money back to shareholders means that the managers did not seek to profit for shareholders opportunities, which implies failure.


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