Research On The Cash Flow Management Of Private Equity Fund

"Cash is the King", this word is well-known in modern enterprise management. Cash flow is so vital to an enterprise that it is to an enterprise like the blood to human’s body. Only cash flows operate well can enterprise grows healthily, while without adequate cash, enterprise can get into a troublesome situation because of no cash to pay everyday fee or due debts, thus cannot run normally, even leads to bankrupt. Cash flow management, as a very important aspect of enterprise finance management, influences enterprise’s operation state and investment decisions, sometimes, even determines its development and survival. Therefore, good cash flow management is essential to an enterprise.In recent few years, private equity fund is becoming an active power in investment market, and attracting more and more people’s attention. Its high return on investment draws the attraction of all kinds of investor, including government funds, investment banks, security companies, personal investors and so on. The way of the investment makes it be the perfect cooperation partner of middle-to-small size enterprise which is in urgent need of fund to support the development. But, the private equity fund industry in our country is in the early stage of development, investment experience is immature, investment capital is insufficient and the law environment is unsound, how to survive and develop under such condition is a serious question which is worth us to think. The cash flow of private equity investment is feature of long investment cycle, large amount of investment fund and the cash flow distribution is unbalanced, so its cash flow management is very key.The first chapter is the introduction of this article, explaining subject background, research purpose, research method, research system and so on.The second chapter introduces the relative content of cash flow and cash flow management, and summarizes all research on cash flow management at home and abroad. The third chapter, as the definition of private equity fund the starting point, introduces the feature of PE, current development status at home and abroad, and the problems which home PE is facing.The fourth chapter describes the concept of private equity fund’s cash flow and its traits, then emphasizes the importance, the goal and the principle of cash flow management to PE.The fifth chapter cites PE A company as the case, analyzes the current problem on its cash flow management, and after considering the condition of both the PE industry and A company, builds a system of cash flow strategic management which includes five aspects, cash flow cycle period management, cash flow dynamic budget management, cash flow control management, cash flow risk management and cash flow management performance evaluation.The last chapter is conclusion of this paper, summarizes the main point and the shortage in research content.The innovation of this article is building a cash flow strategic management system which is fit to home PE, to some extent is the exploration of cash flow management new model, contributing the wide use of cash flow management theory. Based on PE industry, it put forward the concept of dynamic budget management and cash flow management performance judgment system which choose new index; these have high reference value in cash flow management to PE.