A Study On Financial Estimation Of Enterprise's Sustainable Development

It is clearly put forward in the Third Plenary Session of the 16th CPC Central Committee that we will pursue a scientific outlook on development that makes economic and social development people-oriented, comprehensive, balanced and sustainable. This symbolizes another significant breakthrough of the party and government on development view. No doubt, as a global matter of human being, sustainable development is a long-term strategic matter at macro-level, and is the only way to pursue the powerfulness of our country and the affluence of our people as well as the great rejuvenation of our Chinese nation.Enterprises play very important roles in the process of implementing the sustainable development strategy. Enterprises are economic organizations engaging in the production and business operation activities and offering goods or services to the society for the aim of making profits. They are the cells of national economy and the main participants of market economy as well as the direct undertakers of social production and circulation and the principle force of promoting the advancement of social economy and technology. Speaking from a certain perspective, the questions whether the quality of enterprises are good or bad and whether enterprises can adapt to environmental changes or achieve sustainable development directly influence the healthy development of national economy and the lasting peace and stability of society. Therefore, the study on sustainable development theories of enterprises and their application is a popular topic attracting the attention of both foreign and national academic and practical community.In his famous book Sustainable Economic Development Finance, professor Guo Fuchu explored the main financial problems in the sustainable economic development at the level of financial activities by using the concept of scientific development as the guide, but gave litter attention to the sustainable development of financial relationships such as the financial relationships between enterprises and stakeholders, enterprises and environment, enterprises and society, and their assessment. This thesis systematically studies the financial theory on the sustainable development matter of enterprises from the perspective of financial activities and relationships.The general research thought of this paper is: instructed by the strategic thought of sustainable development of enterprises, first define the starting point of study on enterprises' sustainable development finance ,namely the aim of enterprise's sustainable development finance, then with the fulfillment of this goal as the center, carry out study from financial activities, financial relationships, sustainable development report, financial assessment index system and development sustainability measuring model, hoping to perfect the financial theory system of enterprise's sustainable development through such integration of theoretical analysis and positive validation.According to the abovementioned research thought, this paper is divided into 9 chapters with the specific organization is seen as following:ChapterⅠrefers to introduction. This chapter introduces the study background, object, methodology, thought and structure organization of this paper, and gives literature review to the relevant study on sustainable development of enterprises done so far.ChapterⅡrefers to general theories on the sustainable development of enterprises. It begins with a comparative analysis among a group of concepts of increase, development, and sustainable development, indicating their differences and relations. Secondly, it analyses the new meaning of sustainable development of enterprises and provide a theoretical basis for it. Finally, it delimits the concept and study scope of enterprise's sustainable development finance, and with the help of the annual report of ST CO., preliminarily determines the financial factors affecting the sustainable development of enterprises.ChapterⅢdeals with financial aim of enterprise's sustainable development. It makes financial aim's important role in the financial theory study clear, analyses the background of bringing forward the financial aim of maximizing profits, money of shareholders, value of enterprises and profits of stakeholders, and the differences among these aims and the development practice of enterprises. It also explores the conflict among various financial aims and their defects, and points out the probability of integrating various aims and the way of integration under the instruction of sustainable development concept of enterprises. Eventually, it establishes the financial aim function for the sustainable development of enterprises: the maximization of enterprise's value within the restriction of its stakeholders' interests.ChapterⅣis the study on financial relationships of enterprise's sustainable development. It provides some empirical proof for "Win-Win" theory from the positive and negative perspective. From the positive perspective, we made a comparison ,calculation and analysis for the financial performance change trend before and after the enterprise obtained the title of National Environment-Amicable Enterprise, and drew a conclusion that the gross profits and net profits of the enterprise which obtained this title would be obviously increased; from the negative perspective, by employing the case study method, we analyzed the reaction of stock market after the extremely large contamination accident in Tuo River and the accounting income change of Sichuan Chemical Company Ltd. before and after this accident. The results of statistic inspection were: vertically, the three income indexes (net asset yield, return on total asset, gross profit margin) in 2004 (the year when the accident happened) were obviously lower than that of 2003; horizontally, the three income indexes were obvious bigger than the average value of the same trade in 2003, while they were obviously lower than that in 2004 (the year when the accident happened).ChapterⅤrefers to study on the special subject, financial activities of enterprise's sustainable development. V. Home Model is thought to be more consistent with the meaning of sustainable growth rate after being theoretically compared with Higgins Model on accounting caliber basis. Rappaport Model and Colley Model on cash flow basis is believed to be consistent in nature after being compared. Both models established the direct relationship between growth and cash surplus and deficiency, and indicated the linear negative relationship between the growth of enterprise and cash flow. The key factor which limits the growth of enterprise is its free cash flow. Last, the abovementioned two kinds of models are verified by using the historically financial data of wuliangye. It is found that the sustainable growth models on accounting caliber basis are effective tools of growth management and can help discovering the problems of enterprise occurring in its process of sustainable growth, thus they are more suitable for guiding the predication and control of growth management, while the sustainable growth models on cash flow basis can effectively complement the former models on management of cash flow. The growth management strategies of wuliangye are also put forward.Chapter refers to study on sustainable development reports of enterprises. It gives a review to the development history of non-financial reports gradually changing from environmental reports to sustainable development reports, then makes clear that contents of sustainable development reports involve economy, environment and society, andChapterⅥrefers to study on development sustainability measuring model of enterprises. By reviewing the five assessment methods for sustainable development of listed companies and analyzing the historical theory and empirical research, the author believes that the comprehensive assessment for sustainable development of enterprises must be conducted from such three dimensions as economic performance, environmental performance and social performance in accordance with scientific concept of development, brings forward the assessment index system of triple performance: consequently he improves the assessment model of triple performance and then establishes the measuring model for development sustainability of enterprises. Firstly, we reset the index weight by applying questionnaire method and analytic hierarchy process in order to make it get more close to the management reality; finally, we established the measuring model of development sustainability: S=A×B model. By applying this model with the financial data, environmental management data and social performance data of 19 steel enterprises, we calculated the development sustainability of Baosteel Co., Ltd. in 2005.ChapterⅦrefers to the basic conclusions and directions for further study .It draws conclusions for the basic study of this thesis, and makes comment on the financial theory system of sustainable development for enterprises first. Then, it points out the innovation of this paper and analyses its weakness. Finally, it suggests the directions for further study.By applying the method of enterprise finance, economics and statistics, this thesis gives a relevant comprehensive introduction to the matter of financial theories related with sustainable development of enterprises, and carries out case verification. It is one of those academic papers which carries out systematical analysis on the matter of financial theories for sustainable development of enterprises written so far in our country. In all, the innovation of this paper is shown as following:1 .It broadened the study scope of financial theories for sustainable development of enterprises. On the basis of study on sustainable development of financial activities made by professor Guo Fuchu ,this paper put forward the study framework for sustainable development of financial relationships. Professor Guo divided sustainable development finance into cultivation of five sorts of ability as sustainable fund-raising ability, sustainable investing ability, sustainable profit-making ability, sustainable paying ability and sustainable governing ability. He limited the study scope of sustainable development finance at the level of financial activities; the author of this paper argued that sustainable development finance of enterprises should be categorized into two dimensions as sustainable development of financial activities and financial relationships, and financial relationships should be subdivided into three relationships as relationships between enterprises and people, enterprises and environment, and enterprises and society.2. This paper provided some empirical proof for the "Win-Win" theory of Chinese enterprise environment management and financial performance from the positive and negative perspective. The research conclusions of foreign literature contained three kinds of relationships: positive, negative and zero change relationships. Most study supported the positive relationship that is "Win-Win" relationship, but the study in our country only offered the positive supporting proof through some advantageous events. This paper not only contained the positive supporting proof represented by national environment-amicable enterprises, but also included the negative supporting proof represented by the contamination accidents in Tuo River caused by Sichuan Chemical Company Ltd.3. It determined the weight of each index in the sustainable development report by applying questionnaire method and analytic hierarchy process. As the investigation results were acquired from the senior managers in the government and enterprises, the weight was more close to the management practice, and had more practical meaning, whereas triple performance was regarded as being of equal weight in the existing literature.4. It modified the assessment model of triple performance, established the measuring model of development sustainability for enterprises, S=A×B model; and made calculation for the development sustainability of Baosteel Co., Ltd. by using this model. Compared with the triple performance assessment model, dynamically coordinative degree wasn't taken into consideration and reasons for this were givcn by the author.