(A) Comparison of the characteristics of debt financing and stock financing
1. Comparison of unit costs of different financing methods
The unit cost of enterprise financing in different ways is different. The general rule is that the unit cost of debt financing is lower than that of equity financing. In order to integrate capital, enterprises must provide investors with a certain rate of return, which basically reflects the level of financing unit cost. The rate of return consists of risk-free rate of return plus risk premium. The risk-free rate of return is the same under all financing methods, so the rate of return on investment, that is, the unit cost of financing depends on the risk premium. Under the debt financing mode, both bonds and bank loans must be repaid regularly according to the pre-agreed debt interest rate, and in the event of debt crisis or even bankruptcy of enterprises, bank loans and bond debts must be given priority, so the risks faced by creditors are small, so the risk premium that enterprises need to pay to creditors is small. However, equity investors, whether shareholders of listed companies or shareholders of unlisted companies, face greater risks because their investment returns fluctuate with the operating conditions of enterprises. Moreover, when entering the bankruptcy liquidation procedure, only the residual value after repayment of various debts can be recovered, so the risk of enterprise equity investors is far greater than that of enterprise creditors, and the long-term average rate of return provided by enterprises to equity capital must be higher than that provided to debts. In other words, from the long-term average cost, the cost of equity financing is higher than borrowing from banks or bond markets.
In addition, debt interest is often included in the cost, which can offset corporate income tax, while dividends cannot. In this way, the cost of equity financing is further higher than that of debt financing.
2. Comparison of time constraints of different financing methods on enterprises' ability to pay
In the normal operation of an enterprise, the time constraint of repayment of principal and interest is "hard" and there is little room for manoeuvre. If the enterprise can't pay off the due debts, the creditors have the right to start bankruptcy proceedings. Accordingly, the time constraint of equity financing in payment and settlement is relatively "soft" and there is a lot of room for manoeuvre. If an enterprise is profitable, it will pay more dividends, and if it is not profitable, it will pay less dividends or even no dividends. Moreover, no matter whether it is a publicly listed company or a non-publicly listed company, once a shareholder subscribes for shares, unless it is initiated by a shareholder who accounts for a considerable proportion of the shares, any single shareholder has no right to ask for withdrawal of shares after legal procedures, and can only resell the shares and realize them. Therefore, debt financing is far more "hard" to the payment and settlement time of enterprises than equity financing.
Equity financing has two characteristics: soft time constraint and high cost. This financing method is suitable for enterprises whose investment income fluctuates greatly but their expected income is high, as well as enterprises that get high income after long-term no income or low income.
(B) The development of the corporate bond market in the capital market is seriously lagging behind.
There is an obvious phenomenon of \ "strong stocks and weak debts \" in the development of China's securities market. Strong national debt and weak corporate debt, this structural unreasonable market reality, can be clearly seen from the financing amount in the primary market and the trading situation in the secondary market. In the mature international capital market, the bond market is much larger than the stock market, and derivatives such as bond futures and options are also developing rapidly. However, China's bond market not only lags behind the stock market, but also lags behind the stock market and international bond markets in scale and variety, and the corresponding derivatives markets such as bond futures and options are still in a blank stage, further aggravating the abnormal development of the bond market. For a long time, China's corporate bond financing is one tenth of the stock market financing, and the scale of the corporate bond market is insignificant relative to the whole bond market or stock market. In foreign countries, issuing bonds is an important means of corporate financing, and the amount of corporate financing through bonds is often 3- 10 times that through stock market financing. 1999 in the United States, the amount of corporate bonds issued exceeded $250 billion, which was 5.8 times that of shares issued in the same period. Statistics show that China's securities market, including national debt, raised more than 640 billion yuan last year. Among them, the national debt financing is more than 480 billion, and the stock financing is 1400.
More than 100 million yuan, while corporate bond financing is only 654.38+0 billion yuan. There are more than 1000 stocks traded in Shanghai and Shenzhen stock markets, but only 13 corporate bonds.
China's corporate bond market started in the late 1980s, and the unified management of corporate bonds began in 1987. Up to now, China has issued more than 200 billion yuan of corporate bonds, mainly large state-owned enterprises and large-scale projects. During this period, 1990- 1993, there was a wave of bond issuance in China's corporate bond market. At that time, the enthusiasm of enterprises to issue bonds was high, and some places took the opportunity to raise funds in the form of bonds, which directly led to the phenomenon that some corporate bonds could not be paid when 1994- 1996 expired, which caused bad social impact. In this case, the management once stopped approving the issuance of corporate bonds, and the market shrank sharply. It was not until 1997 that a group of Chinese enterprises that had been baptized by reform really had the conditions to issue corporate bonds, and the continuous interest rate cuts and the hot sales of several reputable corporate bonds such as railway bonds and CITIC bonds made corporate bonds recover.
The three main ways of corporate financing are issuing stocks, corporate bonds and bank loans. In the past, the research on financing theory paid too much attention to the proportion of stock and debt financing, but ignored the difference between bank loans and corporate bonds in debt. In fact, corporate bonds have more advantages than bank loans, especially in preventing financial risks. For Asian countries whose banking system has failed, the effective way to avoid the next financial crisis is to develop the corporate bond market as soon as possible. For China, where the financial system is monopolized by huge and inefficient banks, developing the corporate bond market is a wise choice to reduce financial risks.
1, the amount of corporate bond financing is far less than that of stock financing. In the direct financing of enterprises, the proportion of equity financing has maintained steady and rapid growth. Although the amount of bond financing increased rapidly before 1992, accounting for a high proportion of direct financing of enterprises, there was no objective credit basis for the rapid expansion of bonds at that time, and enterprises generally had the problem of insufficient funds. At this stage, stock financing adopts the examination and approval system of "controlling the scale and limiting the number of companies", so bonds have become an important way for enterprises to raise funds. However, some places took the opportunity to raise funds in the form of bonds, which led to the phenomenon that some corporate bonds could not be redeemed when 1994 expired, which caused adverse social impact. In view of this situation in the bond market, in order to standardize the corporate bond market, the regulatory authorities have implemented strict scale control and approval and issuance system for the bond market, which has affected the development of the corporate bond market, and the proportion of corporate bonds in the direct financing of enterprises has decreased year by year. Compared with the mature securities market, corporate bonds have become the first choice of external financing for enterprises because of their unique advantages, and their financing amount is often 3- 10 times that of stock financing. For example, in the external financing of American enterprises, the bond financing reached 9 1.5%.
2. The proportion of corporate bonds in the bond market is too low.
The scale of corporate bonds in the whole bond market has been very small. Take the bond issuance structure of 200 1 as an example. The national debt financing is 654.38+05 billion yuan, and the corporate debt financing is 654.38+04 billion yuan, which is less than 654.38+00% of the total national debt financing. The situation in other years is basically the same (see Figure 2). However, in recent years, China has issued similar financing. But as far as the global bond market is concerned, the proportion of corporate bonds issued is much higher than that of China. According to the data of the first three quarters of 2000/kloc-0, the total amount of corporate bonds issued was $326 billion, accounting for 25.6% of the total amount of bonds issued from 23.6% in the previous year.
3. Compared with national debt and stock market, there are obvious differences in corporate bond market in China.
In the secondary market, there are more than 10 corporate bonds in Shanghai and Shenzhen stock markets, with a total market value of nearly1800 million yuan and a daily trading volume of only several hundred thousand yuan. Even when the 200 1 bond market is good, the turnover rate of corporate bonds is only 0.23, while that of the national debt market of the exchange is 2. 1, and that of the A-share market (Shanghai Stock Exchange) is 1.92. It can be seen that investors' investment demand for corporate bonds is far less than other trading varieties in the market.
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Briefly describe the differences between long-term borrowing, issuing bonds and financial leasing;
① Low financing cost. Compared with stocks, debt interest is paid before income tax.
② Financial leverage can be used.
(3) It is conducive to ensuring shareholders' control over the company.
(4) Conducive to the adjustment of capital structure. When deciding the issuance type, a company can redeem bonds in advance if it chooses convertible bonds in time.
Long-term loans:
(1) Raise funds quickly.
② Low financing cost. The bank's interest rate is low, and it can be paid before tax with low handling fee.
③ Flexible loans. It is beneficial for enterprises to change the loan amount and repayment period according to their own requirements and abilities, and it has certain flexibility for enterprises.
It is easy for enterprises to keep financial secrets.
Financing lease:
(1) Save money and improve the efficiency of fund use.
(2) Quick acquisition of required assets can enable enterprises to form production capacity as soon as possible.
③ Increase the flexibility of fund scheduling. Financial leasing enables enterprises to arrange the payment of rent according to the time period when the leased assets bring benefits, so that the cash inflow and outflow of enterprises can be synchronized, which is conducive to the scheduling and coordination of cash.
The above is Rong Hui's answer for you. I hope I can help you.
The order of capital cost of financing methods: bank loans, issuing stocks, issuing bonds, retained earnings, long-term loans, financial leasing, direct investment and commercial credit retained earnings are definitely the lowest; Secondly, the cost of using commercial credit to form an account period is also very low; Then there is direct investment, with uncertain use of funds and no interest, but it is necessary to transfer some control rights of the company; Next, you need to calculate bank deposits and long-term loans. If only the interest amount is considered, the interest amount paid by long-term loans will definitely be higher, but it is more complicated to consider the time value of money and the inflation rate. Generally speaking, long-term loans are more cost-effective; Then it is necessary to calculate the financial lease; Finally, it is difficult to determine the cost of issuing stocks and bonds, especially stocks. The financing cost is beyond the reach of ordinary enterprises, but once the issue is successful, the money you get back will definitely make you feel worthwhile. The cost of issuing bonds is lower than that of stocks, and I am not sure about the cost of financial leasing.
On the financing mode of long-term debt and its influencing factors. Bond financing means that enterprises raise working capital or capital expenditure by selling bonds and bills to individuals or institutional investors. Individual or institutional investors lend money, become creditors of the company, and obtain the commitment of the company to repay the principal and interest. Financing channels and financing costs should be considered in the financing decision-making of enterprises, so a series of financing theories have emerged.
Debt financing
The important ways of enterprise financing are equity financing and debt financing.
Debt financing can be further subdivided into direct debt financing and indirect debt financing. Generally speaking, the expected return of equity financing method is higher, which requires higher financing cost and greater operating risk; However, the debt financing method has less operational risk and less expected income.
The biggest difference between stock financing and bond financing is that stock financing is decentralized, investors recover profits slowly, and more profits will not be reflected until later, with large profit variables and slow financing; Bond financing, on the other hand, will not disperse the strength of the group and is a fixed form of profit. The amount of financing is greatly restricted by the group's situation and the risk is small. The plan depends on the idea of the person in power and the situation of the company.
Four financing methods (1, internal retained earnings; 2. Bank loans; 3. Issue bonds; 4. Equity financing. ) cost comparison. Internal financing does not need to actually pay interest or dividends, and will not reduce the company's cash flow. Because the funds come from inside the company and there is no financing cost, the cost of internal financing is much lower than that of external financing.
A common external financing method is bank loan, which is relatively simple, cost-saving and flexible, and can play the role of financial leverage. However, bank loans have high financial risks, many restrictions and limited financing amount.
Corporate bonds are essentially borrowing money to pay back money. The fundamental difference with loans is that bonds can be traded publicly. Compared with equity financing, bond financing has lower financing cost, but it has similar shortcomings to bank loans, such as high financial risk, many restrictions and limited financing amount.
Equity financing refers to the company's issuance of stock financing. Compared with debt financing, the advantages of equity financing are as follows: shares belong to the company's permanent capital and do not need to be repaid or bear fixed interest expenses, which greatly reduces the company's financial risks; Because the expected return is high, it is easy to transfer and absorb social capital. However, equity financing also has some shortcomings, such as high issuance cost and easy dispersion of equity.
Compared with other financing methods, bonds issued by listed companies are 1. According to the object of bond issuance, it can be divided into two ways: private placement and public offering. Private placement refers to issuing bonds to a few specific investors. Generally speaking, a small number of closely related units and individuals are targeted for issuance, and they are not open to all investors.
According to the similarities and differences between the actual issue price and the face price of bonds, the issuance of bonds can be divided into parity issue, premium issue and at discount.
There are many financing methods ~ ~ ~ In addition to issuing bonds, there are also issuing stocks, public listing, venture capital funds, angel funds (more abroad), joint ventures or strategic partnerships, selling accounts receivable (more traditional financing methods), equipment leasing and fixed assets leasing, and so on.
3, so much is really incomparable. I think the advantages of issuing bonds are low financing cost and leverage. The disadvantage is that once the debt repayment is difficult, it will easily lead to financial crisis. The financing cost of listing is high, but the risk is small. . . . . . . . . . . . I said the most important thing. You ask so many questions ~ ~ ~)
Banks are both creditors and debtors. A direct financing mode B indirect financing mode C securities issuance mode D are all wrong. (b) The customer deposits money in the bank, and the bank lends money to the customer.
What are the ways of corporate debt financing (1) financing lease?
Financing lease of small and medium-sized enterprises refers to the financing mode in which the lessor purchases the leased property from the supplier according to the lessee's choice of suppliers and leased property, and provides it to the lessee for use, and the lessee pays the rent in installments within the contract or the period stipulated in the contract.
If small and medium-sized enterprises want to obtain financial leasing, their own project conditions are very important, because financial leasing focuses on the future cash flow of the project. Therefore, the success of small and medium-sized enterprises' financial leasing is mainly concerned with the benefits of the leasing project itself, not the comprehensive benefits of the enterprise. In addition, the credit of enterprises is also very important. Like bank lending, good credit is the basis for the next lending.
(2) Bank acceptance bills
In order to conclude a transaction, the SME financier can apply to the bank for issuing a bank acceptance bill. After the approval of the bank, the bank acceptance contract is formally accepted, and the acceptance bank signs the words of acceptance or seal on the acceptance bill. Such a bill accepted by a bank is called a bank acceptance bill, specifically, a bank guarantee to the buyer. The seller doesn't have to worry about not receiving the payment, because the buyer's guarantee bank will definitely pay the payment when it expires.
The advantage of bank acceptance bill financing for small and medium-sized enterprises is that enterprises can realize short-term, frequent and rapid financing for small and medium-sized enterprises and reduce their financial expenses.
(3) Real estate mortgage
Real estate mortgage financing for SMEs is the most widely used financing method for SMEs in the market at present. When enterprises use real estate mortgage to finance small and medium-sized enterprises, they must pay attention to the legal provisions on real estate mortgage in China, such as the Guarantee Law and the Urban Real Estate Management Law, so as to avoid being deceived.
(4) Equity transfer
Equity transfer financing of small and medium-sized enterprises means that small and medium-sized enterprises obtain funds by transferring part of the company's equity to meet the capital needs of enterprises. Small and medium-sized enterprises' equity transfer and financing for small and medium-sized enterprises is actually a process of introducing new partners to attract direct investment. Therefore, the object selection in equity transfer must be very careful and thorough, otherwise, the enterprise will lose control and be in a passive situation. It is suggested that entrepreneurs should consult company law professionals and act cautiously before making equity transfer.
(5) Providing guarantee.
The advantages of providing secured financing for small and medium-sized enterprises mainly lie in grasping market opportunities, reducing the financial pressure of enterprises and improving cash flow. This kind of financing for small and medium-sized trading enterprises is suitable for small and medium-sized enterprises that have opened a letter of credit in the bank and imported goods to the port, but the documents have not yet arrived and are eager to pick up the goods. Small and medium-sized financing enterprises with delivery guarantee must pay attention to the fact that once the delivery guarantee procedures are handled, no matter whether the documents received are inconsistent or not, they cannot refuse to pay or refuse.
(6) International Market Development Fund
This part of the funds mainly comes from the Central Foreign Trade Development Fund. If small and medium-sized enterprises want to raise funds through this channel, it should be noted that the main contents of market development funds include: overseas exhibitions, quality management systems, environmental management systems, certification of software export enterprises and various products, promotion and publicity of international markets, development of emerging markets, training and seminars, and overseas bidding. And give priority to the expansion of emerging international markets, such as Latin America, Africa, the Middle East, Eastern Europe and Southeast Asia.
(7) Internet financial platform
Compared with other investment methods, Love Investment Internet Financial Platform conducts qualification review and field visits for enterprises applying for financing, and selects high-quality projects with investment value to disclose to investors on the websites of investment and financing information docking platforms such as investment and financing circles; And provide a trading platform for online investment, and generate legally effective loan contracts for investors in real time; Supervise enterprise project management, manage risk margin, and ensure the safety of investors' funds. The financing method created by love investment is to let professional institutions do professional things. On the one hand, it takes advantage of the openness and openness of the Internet, and at the same time combines the professionalism of traditional financial institutions in risk control and credit audit. As an investment and financing platform, Ai Investment is in the middle position, with investors and demanders with financing needs on both sides, but it also works closely with third-party guarantee institutions. It has many years of professional risk control capabilities, and all of them are above 1 100 million yuan, providing professional protection for users' investment. At the same time, it also cooperates with credit rating agencies and asset management agencies to comprehensively interpret users' investment information to ensure the follow-up of asset disposal.
Special topic of financial management: the company's long-term funds come from issuing bonds, long-term bank loans, issuing preferred shares and common shares to raise funds. The details are as follows: bond capital cost ratio = 8% * (1-40%)/(1-4%) = 5%.
Bank loan capital cost ratio = 10%*( 1-40%)=6%
Preferred stock capital cost ratio =12%/(1-5%) =12.63%.
Common stock cost ratio = (2/10)/(1-6%)+5% = 26.28%.
Total financing = 40 million+20 million+40 million+10 *100000 = 200 million.
Comprehensive average capital cost rate = 5% * (40 million /200 million)+6% * (20 million/200 million) +[(2/ 10/2%/(kloc-0/-5%) * (40 million/200 million)+[(2//kloc-]