Financing Risk And Strategies Of Debt In The Coal Companies

Debt financing is one of the essential factors of capital structure, which is very important to operation of capital in the modern enterprise. What effectively utilize advantages of low debt cost, cut risk down and explore the dynamic balance point of added-value are the key to avoid the "two-side" of debt funds. Acted risk of debt financing as the main researching subject, combined with MM theory, the dynamic model of enterprise value has been deduced. Depending on net cash flows, the relative equation between debt financing and enterprise value has been put forward. Statistic accounting data from the listed coal companies in China have been accumulated and analyzed by multiple linear regression method, and then the dynamic model of capital structure has been presented. With significant variables and three linear regression methods, as well as Gauss-Newton iteration have been adopted to estimate the optimum debt maturity structure of the listed coaling company. Those have been expected to achieve rational balance between risk of debt financing and earnings.