Joint-stock Enterprise Capital Structure Research

This paper begins with introducing current western capital structure and summarizing the preliminary results of enterprises' capital structure research in China, pointing out that the Debt to Total Assets ratio of most enterprises' is not very high. The real problem lies in the improper fund-raising structure. In fact, the best capital structure is a relative range instead of a fixed point. To the enterprises operating in a changing society, the advantages of financial lever have not been adequately exploited. The basic reason for most enterprises' poor performance is not because of the high Debt to Total Assets ratio, but because of the low capital utilizing efficiency. In view of this situation, this paper suggests that the correct reforming strategy should attach more importance to the improvement of capital utilizing efficiency. In order to assess enterprises' operating performance comprehensively, it is necessary to combine ROA(return on assets)and ROE (return on equity) as well as capital utilization efficiency as the assessing criteria. Based on the above-mentioned analysis, the capital structure strategy of Henan Shuanghui Development Co. , Ltd sine!998 is an appropriate one, and it not only motivates the company to operate with moderate amount of debt but also works out three future development strategies.