Overview
referstothecompositionratioofvariousassetsinacompany’sinvestment,mainlyreferstotheratiooffixedinvestment,securitiesinvestmentandliquidityinvestment.Somecompanieshavetheproblemofinsufficientliquidity.Oneofthemostimportantreasonsisthattheyhavenothandledtheratiooffixedcapitaltoliquidcapitalinvestment.Fromthepointofviewofprofitability,basedonthedifferenceinprofitabilitybetweencurrentassetsandfixedassets,ifacompany'snetworkingcapitalisless,itmeansthatthecompanyusesalargershareofcapitaltousefixedassetswithhigherprofitability,therebyincreasingtheoverallprofitability.Rise;butfromtheperspectiveofrisk,thesmallerthecompany’sworkingcapital,thesmallerthedifferencebetweencurrentassetsandcurrentliabilities,andthegreatertheriskofinsolvencyatmaturity.Inactualwork,iftoomuchcapitalisinvestedinthefixedassetsofthepreviousperiod,itisverylikelytocausebadeffectssuchasshortageofliquidity,inabilitytopurchasegoods,arrearsofemployees'wages,anddeclineinshort-termdebtsolvency.Thefocusofassetstructuremanagementistodeterminealevelofliquiditythatcannotonlymaintainthenormalbusinessactivitiesoftheenterprise,butalsobringmoreprofitstotheenterpriseunderthepremiseofreducingornotincreasingrisks.
Threetypes
Whencompaniesmakeassetstructuredecisions,theyoftenpayattentiontotheliquidityofassets,especiallytheproportionofcurrentassetsintotalassets.Accordingtothesizeofthisproportion,youcanThecompany’sassetstructureisdividedintothreetypes:
1.Conservativeassetstructurereferstoalargeproportionofcurrentassetsintotalassets.Underthisassetstructure,corporateassetshavebetterliquidity.Thisreducestheriskofthecompany,butbecausetheproportionofnon-currentassetswithahigherlevelofreturnissmaller,thelevelofprofitabilityofthecompanyisalsoreduced.Therefore,thelevelofriskandreturnofthecompanyislower.
2.Risk-basedassetstructurereferstothesmallproportionofcurrentassetsintotalassets.Underthisassetstructure,theliquidityandliquidityofcorporateassetsareweak,whichincreasestheriskofthecompany.However,becausetheproportionofnon-currentassetswithahigherlevelofreturnislarger,thelevelofprofitabilityofthecompanyalsoincreases.Therefore,thecompany'sprofitabilityBothriskandreturnlevelsarerelativelyhigh.
3.Moderateassetstructure.Referstotheassetstructurebetweenconservativeandrisky.
Structureform
Assetstructurereferstotheproportionofvariousassetsinthetotalassetsofanenterprise.Accordingtodifferentsigns,itcangenerallybedividedintothefollowingmainstructuralforms:
Accordingtothevaluetransfermethodofassets,itisdividedintocurrentassetsandfixedassets.
Accordingtotheoccupationofassets,itisdividedintotangibleassetsandintangibleassets.
Accordingtotheusestructureofassets,theyaredividedintocurrencyassets,settlementassets,non-commoditymaterialassets,commoditymaterialassets,fixedassets,intangibleassetsanddeferredassets.
Accordingtothecapitalstructureofassets,itisdividedintocurrencycapital,commoditycapitalandproductioncapital.
Accordingtothequantityofassets,theyaredividedintotemporarilyfluctuatingassetsandpermanentlyfixedassets.
Qualitycharacteristics
1.Thecomparativerelationshipbetweenthelevelofcorporatecapitalcostandcorporatereturnonassets.
2.Theperiodcompositionofthesourceofcorporatefundsandtheadaptabilityofthecorporateassetstructure.
3.Thefinancialleverageoftheenterpriseandthefinancialriskoftheenterprise,thefinancialleverageoftheenterpriseandthefuturefinancingrequirementsoftheenterprise,andtheadaptabilityofthefuturedevelopmentoftheenterprise.
4.Theinternalcompositionoftheowner’sequityoftheenterpriseandtheadaptabilityoftheenterprise’sfuturedevelopment.
Capitalstructure
1.Reasonablyarrangingthedebt-to-capitalratiocanreducethecompany’scomprehensivecostofcapital.
2.Reasonablyarrangethedebt-to-capitalratiotoobtainfinancialleveragebenefits.
3.Reasonablyarrangingthedebt-to-capitalratiocanincreasethevalueofthecompany.
Impact
Becausebusinessoperationsaretheuseofvariousassetstomakethemfullyfunctionalandgeneratethegreatestbenefits,thesedifferentdivisionsanddifferentstructuresofassetswillaffecttheproductionofthecompany.Businessandfinancialactivitieswillhavedifferentimpacts.
1.Riskimpact
Fortheentireeconomicactivitiesofanenterprise,itcanbedividedintotwoaspects:pureproductionandoperationactivitiesandfinancialactivities.Pureproductionandoperationactivitiesareplanning,operation,andoperationofthemainbusinessanditsaffiliatedbusinessestorealizeprofits,whilefinancialmanagementactivitiesaretoraisefundsforproductionandoperationactivitiesandotherinvestmentactivities,managefunds,andimprovetheefficiencyofcapitaluse,etc..Therefore,therisksfacedbyenterprisesaredividedintooperationalrisksandfinancialrisks.Iftheassetmanagementoftheenterpriseisinefficientortheassetoperationisnoteffective,itwillcauselossestotheenterprise,andatthesametimehavecertainoperatingrisks.Intermsofcorporatefinancing,itismainlyduetofinancialrisks,thatis,thecompanycannotrepaytheprincipalandinterest,andwhenusingthecapital,itmustensurethatthecompanyrecoverstheoriginaladvancesandobtainsthecorrespondingbenefits.Itcanbeseenthatcorporatefinancingfacesfinancialrisks,whilecorporateassetsmainlyfaceoperationalrisks.Thisarticlemainlydiscussesthebusinessriskofcorporateassets.
Differenttypesofassetswillposedifferentbusinessriskstoenterprises.Generally,liquidassetsorshort-termassetscancompleteturnoverandrealizevalueinashortperiodoftime.Therefore,themarketexpectationsofenterprisesforsuchassetsareofteneasierandaccurate,andmarketchangesintheshort-termaregenerallyrare.Thereislessinconsistencybetweenmarketexpectationsandmarketchanges,whichmakesitpossibletooperateassetseffectively,whichmeansthattheoperatingrisksofsuchassetsarerelativelysmall.Inaddition,theinternalcurrentassetsalsodependontheliquidityofvariousassets,andtheinternalshort-termassetswillgraduallyincreasefromsmalltolargeaccordingtothelengthoftimethatvariousassetsoccupy.Sincetangibleassetshavephysicalvalueasthebasis,theiroperatingrisksaremuchsmallerthanintangibleassetswithoutphysicalvalueasthebasis.Ifthereisnoimpactofinflation,thereisnooperationalriskinmonetarycapital.
However,fixedassetsandlong-termassetsneedtocompletetheturnoverinarelativelylongperiodoftimetorealizetheirvalue.Inthislongperiodoftime,themarketisunpredictable.Itisoftendifficultforcompaniestomakelong-termmarketforecasts,anditisnoteasytobeaccurate.Themarketexpectationsofasset-basedcompaniesareveryeasytodeviatefrommarketchanges.Fromtheperspectiveofthecompositionoffixedassetsandlong-termassets,thelaborproductsorcommoditiestheycanprocessarerelativelystableandsingle.Oncemarketdemandchanges,theseproductsorcommoditiescannotbesold,sothatfixedassetsandlong-termassetscorrespondtoeachother.Landbecomesawasteproduct.Therefore,ifcompanieswanttooperatetheseassetseffectively,theywillinevitablyencountermoremarketobstacles,whichmakestheoperatingrisksoftheseassetsrelativelylarge.Intangibleassetsarealsolikefixedassets.Regardlessofwhethertheenterpriseisoperatingornot,itstransfervalueoramortizedcostwillstilloccur.Itisafixedexpense.Therefore,itsoperatingriskisgreaterthanthatofphysicalassets.Differentfromcurrencycapital,commoditycapitalandproductioncapitalmustbesoldinthemarketbeforetheycanbeconvertedintocurrencycapital,sotheyalsofacegreatermarketrisks.
Fromtheabove,itcanbeseenthatbecausedifferentassetsfacedifferentrisks,theassetstructureofenterprisesisdifferent,andtherisksthatenterprisesbeararealsodifferent.Thedemandfordifferentassetscanalsominimizetheoperatingriskoftheassetstructure.
2.Incomeimpact
Differentassetsalsohavedifferentimpactsoncorporateincome.Assetscanberoughlydividedintothreecategoriesaccordingtotheirrelationshipwithcorporateearnings:oneisassetsthatdirectlyformcorporateearnings;theotherisassetsthatdonotaffectcorporateearningsforacertainperiodoftime;thethirdisassetsthatdeductcorporateearningsforacertainperiodoftime.Theassetsthatdirectlyformcorporateincomemainlyincludesettlementassets(exceptforprepaidaccountsandotherreceivables),commodities,productassets,investmentassets,etc.Theassetsthatdonotaffectthecompany'searningsforacertainperiodoftimearemainlymonetaryassets.Theassetsthatdeducttheincomeofthecompanyforacertainperiodoftimemainlyincludenon-commodity,productassets,fixedassets,andintangibleassets(ordeferredassets)forexpenditure.Theseassetscancontributetotherealizationofcorporateincomewithinacertainperiodoftime,orcorporateincomeRealizetheindispensableconditions.However,fromtheperspectiveofactualincomecalculation,thetransferoramortizationvalueoftheseassetsisadeductionitemfortheincomeobtainedbyotherassets.Therefore,undercertainconditionsoftotalassets,themoretheseassetsareoccupied,themoreprofitstobededucted,andthesmallerthecorporateprofits;andviceversa.Therefore,inthetotalassetsoftheenterprise,theproportionofassetsthatdirectlyformtheincomeoftheenterpriseshouldbeincreasedasmuchaspossible,andtheproportionoftheothertwotypesofassetsshouldbereduced.
Inaddition,theimpactofassetstructureonincomeisalsomanifestedintheincoordinationoftheinternalstructureofassets,whichmakesoneassetover-occupiedandthelossofanotherassetduetoshortage.Thislossismanifestedintwoaspects:oneistheexcessoccupationofassets,whichinturnincreasesthecostofcapital,whichisreflectedbythefinancingcost;thesecondistheshortoccupationofassets,whichwillaffecttheoverallturnoverofcorporatefunds.IftheturnoverbenefitsCertainly,theresultwillinevitablyreducethetotalturnoverbenefits.
3.Liquidityimpact
Theliquidityofassetsreferstothespeedatwhichassetscanberealized.Thelevelofassetliquidityisrelatedtothelevelofriskandreturnoftheasset.Ingeneral,assetswithhighliquidityhaverelativelylowrisksandrelativelyhighreturns;conversely,assetswithlowliquidityhaverelativelyhighrisksandrelativelylowreturns.However,theremayalsobeinconsistencies:
(1).Short-termsecuritieswithstrongliquiditymaybeunfavorableduetomarketchanges.Thereisaloss.Onthecontrary,theliquidityofsecuritiesinvestmentincorporatelong-terminvestmentissmall,butbecausetheeconomicbenefitsoftheinvestmentcompanyaregood,theinvestmentreturnofthecompanyisrelativelyhigh;
(2).OnceahighlyliquidassetisencounteredWhentheobstaclestotherealizationofthemarketarereached,theycannotbesoldandbecomesluggishproducts,andtheirbusinessrisksareveryhigh.Undernormalcircumstances,acompany’scurrentassetsarebetterthanfixedassets,financialassetsarebetterthanphysicalassets,profitableintangibleassetsarebetterthanexpenditureintangibleassets,short-termassetsarebetterthanlong-termassets,monetaryassetsarebetterthancommodityassetsandproductionassets,andassetsthattemporarilyfluctuatearemorepermanentthanpermanentassets.Fixedassetsarehighlyliquid.
However,ifthequalityofassetsisabnormal,theliquidityrankingmustalsobebasedonassetquality.Theassetqualityreferredtoherereferstothemarketabilityofitsmarket,whichcanbedividedintobest-sellingassets,flat-outassets,slow-movingassets,anddiscontinuedassets.Amongthem,slowsalesareassetsthatareoversupply,buttherearestillmarketableassets,andthesuspensionofsalesmeansthattheassetsarecompletelyeliminatedbythemarket.Itcanbeseenthatassetqualityismainlyrelatedtoinventoryquality.Onceanassetisstopped,itsliquidityiszero.Therefore,theliquidityofinventorymaybecomethesmallestamongallassets.
Structuraloptimization
Manycompaniescannotcreateprofitsthatmeettherequirementsofreturnoncapitalintheiroperationsbecausetheyhavetoomanynon-operatingassets.Forexample,manydomesticcompanieshavetheirownConferencecenters,canteens,staffdormitories,etc.;anotherexampleisthatmanycompanieshavealargeamountofinventoryandaccountsreceivablewithnorealizablevalueontheirbooks.Obviously,theseassetsdonotdirectlygeneratevalueforthecompany,buttheyoccupyalargeamountofcapitalandgenerateconsiderableopportunitycosts.Ifthesecompanieswanttoimprovetheefficiencyofcapitaluseandreducethecostofcapital,ontheonehand,theycanrealizeinventoryandaccountsreceivablethroughflexiblebusinessstrategies,andontheotherhand,theycanconsiderusingfinancialmeanstodivestnon-operatingassets.Belowwefocusonwhatfinancialmeanscompaniescanconsidertooptimizeassetstructure,improvecapitalefficiency,andachieveprofitablegrowth.
1.Spin-offassets
Spin-offassetscanbeusedwhenthevalueofthelistedcompany’sassetsishigherthanthevalueasawholewhenitissplitintothemarket.Thevalueoftime.Forexample,MarriottHotelsplititsassetsintotwoin1993andsplititinto"MarriottInternational"andMarriottServices.MarriottServicescontrolledthegroup'srealestateanddebt;MarriottGroupinsteadsoldMarriott'sservicestohigh-taxcompanies.Investors,becausetheyarewillingtopurchasethetaxshield*broughtbytheserealestateanddebtsatapremium,tohelpthemreduceincometax.AndMarriottInternationaltransformsintoapureserviceorganization,signinglong-termmanagementagreementswithinvestorstooperatethehotelManagement.Ontheonehand,thisspin-offdirectlygeneratescashforthecompanythroughassetsales,andontheotherhand,itprovidescompanieswithastablesourceofincomethroughlong-termmanagementagreements.
2.DebtfinancingandLeasefinancing
Ofcourse,splittingassetsisnotalwaysthebestwayforcompaniestoimprovecapitalefficiency.Inmanycases,themarketcannotprovideareasonableassetprice;Inotherwords,theremaynotbesomanyavailabletangibleassets.Inthiscase,debtfinancingisasuitablemethodtopromotesustainablegrowth.Thefundsbroughtbydebtfinancingcanprovidecompanieswithmoreexpansionopportunities.However,corporatetreasurersalsoneedtoconsiderthecorporatedebtandequitystructure,andwhethercashflowandprofitcancoverthecostofdebtfinancing:
Whatistheliquidityoftheassets.ThecashonhandofthecompanycanbeItisregardedasaguaranteeofdebt,andatthesametime,companiescanalsoadjusttheircashpositionsbycontrollingtheamountofdebt;
Theimpactofinteresttaxreductionincomeoncashflow;
Otherdebtfinancingsolutions,suchassomeinterestdeferredloansthatmatchcashflowoutflowswithinflows;
Formanycompanies,especiallysmallandmedium-sizedForcompanies,thereisoftenagapbetweentheirabilitytoaccessthecapitalmarketandtheirdesiretoraisefunds.Theyneedtoconnectmorecloselywiththemarketandmeetthereturnexpectationsofcapitalproviders.Newcompaniesthatarenotfamiliarwiththemarketoftenneedtoobtainfinancialcreditfirst,andInthisprocess,agoodasset-liabilitystructurecanundoubtedlyplayanimportantrole.
Theasset-liabilitymanagementmethodthatcompaniescanconsiderisleasefinancing:whentheopportunitycostofcapitalislowerthantheleasecost,directpurchaseAssetsareabetterchoice;ontheotherhand,ifleasingismoreeconomical,companiesshouldselltheirassetsandleasethemback.SanjiuGroupusesShenzhenFinancialLeasingCompanytoraisefundstohelpitdeveloptensofthousandsofchainpharmacies(ofcourse,threeInthisexample,NineGroupactuallytransferredthefinancialrisksofits100%-controlledpharmacybusinesstoits50.29%-controlledleasingcompany,whichissuspectedofconflictofinterest).
3.Dealingwithnon-profitsCoreassets,thesourceofretainedincome
Enterpriseswithexcessivelyhighasset-liabilityratioscanhaveavarietyofsolutionstooptimizetheirbalancesheets:raisefundsbyrealizingnon-coreassets;orreducemanagementcoststhroughoutsourcingagreementsInsomecases,acombinationofthetwomethodsmaybemoreappropriate.
Thebookvalueofcorporateassetsisoftenmuchlowerthanthemarket’sFairvalue,socompaniescanobtainpremiumincomebysellingtheseassets,whichwillconvertfixedexpensesintovariableexpenses,therebyimprovingbalancesheetsandimprovingfinancialratios.Inaddition,theenterpriseleasesbacktheassetsfromthepurchaser,whilemaintainingcontrolovertheproductionorbusinessprocess.
Butinsomecases,thetreasurermaytaketheapproachofoutsourcingnon-corebusinesstoathirdparty.Ifthebusinesscanbemanagedmoreeffectivelyafteroutsourcingthebusinesstoathird-partyprofessionaloperator,andtheproductqualitycanbeguaranteedwhilereducingcosts,itwillundoubtedlybebeneficialtotheenterprise.