Na Company's Financing Model And Evaluation

The Restructure of Chinese economic system has brought about huge opportunities for the development of medium-sized and small enterprises in China. As the steps of reform and opening to the outside world going further, these enterprises are playing an increasingly noticeable role in propelling economic development, gradually becoming the main force of growth in the national economy. On the other side, these enterprises are also facing more and more challenging problems, some due to the internal imperfection, others resulting from restrictions of governments and financial institutions. Within, most of medium-sized and small enterprises in China are disadvantaged in competition with other large-scale companies because of low human capital accumulation, limited managerial knowledge on the part of managers, and inadequate capital and material supply. Without, with much higher need of financing for survival, there is still a lack of sufficient and effective financing channels available for these enterprises, due to problems such as few fixed assets, low credit levels, and weak financial regulations.NA Company, as one of the famous companies in the radio, film and television industry, is confronted with similar issues. There are currently two main financing channels; one is bank loans, the other is private finance with equity in pledge. As NA grows bigger, inconveniences are emerging in both channels. Complicated procedures, long loaning terms, requirement of collateral, and NA's past adverse record, all of these problems have rendered it difficult for bank loan applications. The alternate way involves intercompany loans which might help solve temporary financial strain. However, there are still some drawbacks: unstable resources, high lending fees, and high payback risk once ongoing projects fail. Through this analysis, the author argues that, to handle with the problems of simple ownership structure and incomplete financial system, it is necessary to introduce the concept of equity investment and ownership rearrangement.This article tries to analyze the current financing situation of NA Company after a systematic review of relevant theories, focusing on financing cost and risk analysis. A series of financing problems are pointed out, including ineffective channels, unreasonable structures, high costs, and incomplete risk evaluation system. Based on these detailed analysis, the author suggests improvement in five aspects: financing channels, financing initiator, financing scale, financing conditions, and financing structure. Four strategies of implementation are also proposed: 1, improve the quality of financing companies; 2, broaden financing channels; 3, strengthen risk consciousness; 4, reduce financing costs. In the last part, this article introduces the making of NA's financing mode, and suggests inviting venture capital and actively preparing for listing.