Financing Strategy Analyze Of JiLin Deda Company Ltd.

Jilin Deda Co. Ltd is a jointly invested intergrated company between Songliao Animal Husbandry Company and CP Group of Thailand engaging in chicken meat production and processing. From 1992 To 2002 , Jilin Deda Co. Ltd is a vertical integration of agro-industry. Stock rasising and trade , with the management in high debt, sell income and profit increasing steady. But in 2003 and 2004, with the changing of market, sell income declined greatly, company becomed to the bad, and finance got into crisis. At the end of 2005, chicken meat market come into good position, but jilin de da co. ltd didn't get rid of bad phase.The thesis mainly analyze about huge deficit of Jilin de da co. ltd in financing strategy. It included five parts:一,Development and management of Jilin de da Co. LtdJIlin De Da Co. Ltd is a group enterprise, consisting of poultry breeding, broilers raising, feed processing and meat processing. It is an economic entity with multi-management and combining advantages into one.Through years of development, the company has become one of the ten key agro-industry enterprises in China and has been listed one of the Fortune 500 Foreign Invested Companies as well as the world fortune 500 agro-industry companies. It was approved the certification of ISO9000 in the year of 2000.Under the influence of bird flu and SARS in 2003 and 2004, Chicken meat market keep lower. Sale income lowered deeply. The company become to the bad.二,Finance status analyzing of Jilin Deda Co.LtdBasing on 2002's, 2003's and 2004's finance date report forms, we can draw a conclusion :from the date analyse of liquidity ratio, speed ration, cash catio, current assets is reducing, but debt is rising yearly. Company's repay ability is weakening, finance risk is becoming.In 2003's and 2004's, capital asserts velocity, general asserts velocity reduced than 2002's. it indicated that fore invested capital asserts had left unused, capital asserts use efficiency had droped, whole asserts management efficiency had droped, operating ability had droped.In the 2003's and 2004's, asset retained profits is negative. It indicated that compay profit ability is declining, and management risk is becoming.三,Financing decision analyzingFinancing decision include three parts: financing cost, Financing leverage domino offect, financing fabicFrom financing cost analyzing ,we can draw a conclusion : in 2002's ,financing cost is smaller than asset retained profits ,but in 2003's and 2004's financing cost is bigger than asset retained profits, the company became to the bad.From the analyse of financing leverage domino offect, we can see that proportions of capital asserts is too high, fixed cost increased, quotiety of operating leverage accretioned. in 2003's and 2004's , Quotiety of operating leverage is twice than 2002's, it is dangerous to the company.In 2002's quotiety of financing leverage is 1.6, asset profit margin is bigger than debt accrual, financial leverage make it positive effect. In the 2003's and 2004's quotiety of financing leverage is negative, asset profit margin is smaller than debt accrual, financial leverage make it negative effect,company financing is becoming badly.From asset structure analyse, we can see that is dangerous of big fixed assets and small immateriality assets. We can conclude that big fixed assets, low fluidity small capital structure flexibility can cause finance risk.四,Financing risk analyzingThere are two factors in financing risk: inside and outsideInside factor includes debt size, debt accrual and debt term structure.Financing burden of jilin deda Company is heaviness under the big debt size and high debt accrual. The debt term structure is not illogicality,It bring the big pressure because of lack of cash current.Outside factor includes operating risk, pro cash net flux , asset fluidity, money market ect.It made Jilin de da in an inclemency market position at the term of SARS and bird flu. The lower vendition market, drop of sell income, those had become a big risks.From the blance of these factors: financing risk, capital structure and symmetry risk of financial leverage, we can draw a conclusion: good capital structure can make financial leverage bring positive effect, and lower financing risk.五,suggestion of jilin deda Co. Ltd financial strategyBase on the analyzing financial strategy, we suggest:1.Asset recombining and debt recombiningWith the asset recombining, we can improve using efficiency of asset. Debt recombining can get the support from government and finance framework, prolong the course financing and fixed assets loan term, derate loan accrual partly. All these can keep company operate well.2.Enhancing inter control, reforming financing managementReforming cash management, establishing new system in cash income and payment, balance management, interior control, cash budget and other, in order to settle the shortage of cash, reform the capital status.3. Reduce the size of debt moderately, maintain the proportion of debt.Strengthen the financing management, speedup the financing turnover.4.Increase financing channel, impose the trade financingMake use of all kinds of financing ways, such as corporation bond commercial paper, bankers'acceptances, ect.