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A Study On Capital Operation Of High-Tech Enterprises Based On Life Cycle

Posted on:2011-06-29Degree:MasterType:Thesis
Country:ChinaCandidate:Y WangFull Text:PDF
GTID:2189360308482493Subject:Financial management
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With the beginning of the 20th century,90 years,our country's high-tech industries developed rapidly, strengthening its position in the national economy.In the international competition of economic strength and national strength,one country's place in high-tech and related industries has become a safeguard in the lifelines of the national sovereignty and economic security. Therefore, the development of high-tech enterprises are paid more and more attention. Uder our country's special financial system and capital market environment, due to high-tech enterprise with high-risk, high-yield, high-growth, less tangible assets but more intangible assets and poor management, high-tech enterprises came across many problems in the development, especially prominent in the increasingly contradiction between its high capital requirements and the limited financing channels. The most important way to solve this problem is the capital operation, without which none enterprise can be succesful. However,in China the practice in capital operation is still in the immature stage,and many entrepreneurs still hold wrong concepts of capital operation. For high-tech enterprises, how to achieve a reasonable resource optimization while ensuring to achieve corporate strategic objectives becomes a concern problem. How to select the appropriate mode of the capital operation according to different stages in the development? How to improve their internal management by themselves to better capital operations? For the state,how to improve the current macroeconomic environment and the policy?These problems become a research topic recently.Theoretical circles concerning high-tech enterprises has been increasing, mostly from the high-tech enterprise's financing difficuly,then researched in how to solve the bottleneck problem with relevant evidence and investigation research.But the study about high-tech enterprise's overall capital operational from the aspect of life cycle is relatively small. From the view of the researched objects, our predecessors have mostly studied the capital operation modes of state-owned enterprises and private enterprises with explanation in the form of cases, as contrast to the less high-tech enterprises as a research object. This paper argues that capital operation is particularly important in high-tech enterprises because of the particularities of the high-tech enterprises, which determines a significant difference on their life cycle compared with the traditional enterprises.At every stage of development, the capital demands and the risk characteristics of the high-tech enterprises are also different, so the capital operation modes the enterprises choose should also be different. Therefore, capital operation of the high-tech enterprises should be closely integrated with their life cycle. This paper will mainly focus on the life cycle of the high-tech enterprises, study capital operation of the high-tech enterprise and analysis the current status of capital operation of high-tech enterprise. Compared with the theoretical analysis, we can gain the development obstacles of the high-tech enterprises and propose the optimization approaches based on it Main parts of this paper mainly include the following aspects:Based on exploring capital operation theory and the characteristics of high-tech enterprises,the'first part is mainly discussing suitable capital operation models in every period in the life cycle of high-tech enterprises,and the importance of each model in different life-cycle.Capital operation is operating capital.we can defined it as an activity, on the basis of the capital structure operation, which contains capital consumption and the use of capital in various forms-through the use of the value of capital in order to maximize the value of the enterprise. Specificly, it includes capital raising, capital investing and capital restructuring. Capital management process is flexible, relying on different situations,which should be consistent with the develepment of itself. So high-tech enterprises should choose the appropriate capital operation strategy based on the actual situation of enterprises. For this reason, high-tech enterprise capital operation should be linked with its life-cycle.High-tech companies have many distinctive characteristics such as high innovation, high input, high risk, high-yield, high growth, high degree of asymmetry between internal and external information, the uniqueness of organizational structure and governance structure and so on,which determine the life cycle of high-tech enterprises obviously different from the traditional enterprise. In this article, I will divided the life cycle of high-tech enterprises into five period which contans gestation period, start-up period, growth period, maturity period and decline period.Through analyzing capital requirements, risk characteristics and the situation on the basis of assets in high-tech companies'each life-cycle, companies should select the appropriate investment and financing methods combined with each of the characteristics of a capital operation mode. In the gestation period, high-tech enterprises have not really set up and begun normal production and operation.Its main sources of funds are entrepreneur's personal investment, government support fund. if the funds are really in shortage,it may also involve non-governmental credit funds and venture capital.Capital destination is mainly the wages of R & D team and test supplies.In the start-up period, high-tech companies begin production operations, which period is the key to scientific research. They are faced with machinery and equipment procurement, human capital investment and product promotion, requiring a lot of money, but because of the lack of business entities, capital raising is primarily through venture capital, government support for research funding channels.If necessary,they also can strive for short-term borrowings of financial institutions. Capital is mainly invested in equipment procurement and production lines constructing, product promotion and so on.When high-tech enterprises go into the growth stage, enterprise's technology basically matured, and their market share increases. With a certain asset base, high-tech enterprises mainly use project long-term loans, commercial credit, short-term loans, etc. to raise funds, you can also strive for long-term bonds, venture capital financing, intangible assets,financing and public financing, The funds are mainly for the procurement of raw materials, equipment, plant,advertising costs, while companies are starting preparatory work for listing. In the maturity period, enterprises'major problems are technical risks.In order to be sustainable in the development of enterprises, businesses began to use risk investment, portfolio investment, industrial investment, mergers, acquisitions, restructuring and other capital operating modes.They start to broaden the financing channels, all the financing models in the before periods can be used, but high-tech enterprises tend to public financing, bond financing, long-term loan financing models. In enterprise's recession development, companies began to be managed, mergered and bankruptcy in order to achieve overall rational resource allocation purposes.The second part mainly analyzes the current capital operational status of high-tech enterprise in China through arranging researched data existed and the database part about high-tech companies in CSMAR. The study found:In the financing, the paper quoted the data of high-tech enterprise in Hunan, Guangdong in 2007 surveyed by the World Bank's private affairs branch of an International Finance Corporation (IFC) to find high-tech enterprises' present capital operation models in the first three period. Also I choose the current high-tech enterprises in 2006-2008 of listed companies for the sample,through analysis of its capital structure and related financial ratios,to find financing situation of high-tech companies in maturity status. In general, the means of high-tech enterprises'financing are not so many. According to the proportion of the financing models,the order are:the shareholder'sinvestment,a short-term borrowings,long-term loans,venture capital, others,national technology innovation fund and corporation bonds.The results reflects that high-tech companies tend to use the equity financing first,and short-term borrowing is far greater than the long-term loans.The long-term bonds are seldom used. The proportion of national technology innovation fund is small.Listed financing and venture capital in the gestation period and maturity are difficult to use.As for intangible assets financing, finance leasing, overseas listing financing models studied under less.Then through analysis their investments status, analysis found that high-tech companies'investment in fixed assets, internal R & D expenses increased year by year.but the proportion of input is far less compared with developed countries.That's because that China's high-tech companies R & D funding comes mainly from its own corporate funds, and government funds and financial institutions accounted for only a small part. From investment quota of view, high-tech business investment increase in each industry,mainly in pharmaceutical manufacturing and electronic communication equipment manufacturing, followed by computer and communications equipment manufacturing.However, relevant data show that high-tech enterprises in the maturity spread a number of industry and involve in a number of unfamiliar industries in order to decrease risk, led to blind investment and thus investment failure.Besides, the capital restructuring of high-tech enterprises are analyzed, although there have been many success capital operation of high-tech companies such as China's Shanda, most of them merely restructure it as a goal of obtaining funds rather than only a means, and seldom care about the future and development, it would be very wrong. Realistically speaking, in China's capital market, too frequent to transfe shares, mergers, asset replacement, as well as backdoor listing are actually quite normal and regular.The third component are about the optimization approaches through analyzing the major causes of the problems in high-tech enterprises currently in China. Analysis clearly shows that the theoretical analysis and high-tech enterprise capital operation are obviously different. This article maily find the causes from the capital market factors, the financial system factors, their own factors, and government support efforts. On this basis, this paper presents optimization of high-tech means of capital operation. In order to make sure that the high-tech enterprise capital operation in the enterprise to play double effects, we should make efforts from within and external aspects. From the inside, high-tech enterprises should improve their management level to strengthen the internal governance structure as the strong backing of capital operation, while focusing on human capital in the enterprise,Companies should establish a correct concept of capital operation,and choose the right capital operation models in close connection with enterprise life cycle and specific conditions.From the outside, the state should improve the capital market, the financial system and risk investment system,and increase efforts to support high-tech enterprises.In general, the main contributions of this paper contans three aspects.Firstly,I analyzed and sumarized is that capital operation model of high-tech companies based on the life cycle.Secondly,through the relative data collected,I analyze China's high-tech corporate's current situation capital operation. Thirdly,while recognizing differences between theory and the status of high-tech enterprise in China,I analyzed barriers to the causes of capital operation, and made a number of optimization approach. However, as my theoretical level is limited,and I am lack of practical experience, the points raised in this article and suggestions are to be further tested.
Keywords/Search Tags:high-tech enterprise, capital operation, Life cycle, optimization approach
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