Case Studies Of The HL Company’s Financing Options

In recent years, with the rapid development of economy in China, the transportationnetwork is constantly being improved. Transportation industry’s future development will begiven priority to the transportation structure adjustment. Because the transportation industryhas the features of large fixed investment, long investment payback period and mass capitaloccupied, so when a transportation enterprise is on the way of its expanse, it firstly has toconsider the rationality of the capital structure and ways to expand the financing channels.And then after the very first thing mentioned above is solved, subsequently, it will need toconsider how to ensure the funds can be effectively used to invest the projects, how to ensurethe future distribution of the profits and how to reasonably evade the financial risks of thefinancing in the premise of meeting the demand of daily operation and management. Theabove things are all tightly related to the survival and development of a transportationenterprise.This article adopted the method of integrating theory with practice, and selected the HLtransportation company’s case as the research object. Introduce the transportation industry andcurrent status of HL company’s operation and financing, and then base on the HL Company’sactual situation to analysis the HL Company’s financing case.First of all, the paper analyzes the HL Company’s operating characteristics, the industrialdevelopment trends and the angle of financial status. And then descripts the company’sfinancial indicator characteristics, shows transportation enterprise financing situation and thecompany’s capital structure through the income and cost structure angle and cash flow angle.Secondly，according to the HL Company’s financing needs and investment direction,based on the Company’s status all from its too high level of asset to debt ratio, its highlong-term debt repayment pressure to its investment plan and needs, Profit distribution andneeds, financing ways and risk, the paper deeply analyzes and compares the two differentfinancing options and made a comment. And then combined with the company’s strategicdevelopment, industry characteristics, HL financing cost and financing risk, determines theHL Company’s financing options.Finally, the paper comes to the conclusion that when a company, especially atransportation company, facing a choice of debt financing or equity financing. It mustcomprehensively consider the company’s investment strategy, the equilibrium of financingrisk and revenue, the optimize of capital structure. And a good communication with shareholders during the financing process also seems very important.To sum up, the transportation enterprise investment project at one hand takes up a lot offunds; at the other hand continually raise the enterprise’s asset-liability ratio. And higherfinancing costs reduce the profits of enterprises, and increase the financial risk. Therefore,when choosing the financing way for transportation enterprises, equity financing can increasethe company’s equity and keeps the company at a relatively low cost of funding to address theneeds of the development of enterprises and external market environment change.