The Research On Capital Allocation Efficiency Of Enterprise Internal Capital Market

China’s external capital market has not been perfect yet, which seriously limitsenterprises to use external capital market to carry on financing. At the same time,there’s a large amount internal capital inside the enterprise group itself, which makesmay be not utilized effectively among each member and then causes the enterprise tomiss opportunities for investment. From1980s, China Government began to promotethe construction of enterprise group, which makes plentiful listed company existenterprise groups and the problems of studying the allocation efficiency in internalcapital market of enterprise group emerge. There’ a great significance for theadvantages of China’s enterprise group to use internal capital market in order tooptimize and perfect financing and investment activities of enterprise group andenhance the efficiency of enterprise’s internal capital allocation.This paper first reviews the study of capital allocation in internal capital market,summarizes the research content and study method of internal capital market, and fullyunderstands the general situation of internal capital market from the existence,allocation efficiency and the empirical results of internal capital market. It thensummarizes the study of investment returns and financing cost and finally reviews thestudy of financial data’s disclosure.According to the investment and financing activities of an enterprise group, thispaper introduces the ideas of financing cost and operation return on investment into thecapital allocation optimization model of internal capital market. First, the study analyzesthe financing input and investment output and establishes the linear programming modelwhich takes the optimization of net profit as the objective function. Then, the data offinancial statements are translated into managing journal data, financing optimizationand investment optimization of Baogang Group are carried on with the capital allocationtheory in internal capital market and the model is fixed through the actual data. Finally,the optimization results are analyzed.Based on the managing financial statements idea and related theory, this paperclassifies and collects financial indicators according to the nature of the enterpriseactivities and makes indicators match each other in order to satisfy the need ofinvestment and financing management in internal capital markets, which will makes theanalytical results more precise. Based on the employment of income cost method andlinear programming method for investment and financing indicators, the capitalallocation of Baogang Group is optimized, and the increase degree of this enterpriseafter using internal capital markets is quantitatively measured. This study can providereference and suggestion for the enterprise group’s decision-making to allocate capitalusing internal capital markets.