The Research On TE Companies Capital Structure Optimization Based On Cash Flow

Cash flow like the blood of the enterprise, if the enterprise lack of cash, it is inevitable there will be debt-crisis, or even ultimately to collapse. For power companies, the cash flow is more important. Mainly displays in:the infrastructure of higher financing costs, the larger of the production and operation expenses, debt service pressure, which led to a large amount of cash outflows. Capital structure has been a hot topic in corporate financial management.It is closely related to cash flow, capital structure involved in all aspects because raising, management and distribution of benefits, such as corporate capital, the pros and cons of capital structure will affect the quality of corporate cash flows.TE Company of hydroelectric power industry companies is unlike general energy companies, but also different from the general thermal and other power generation companies. Its products are not mass storage products subject to greater restrictions objective natural conditions and geographical environment. Due to the drought in Yunnan and Guizhou in recent years, the revenue of the TE Company has not reached the historical average level. Repayment pressure is bigger and bigger, and the reduction of depreciation of fixed assets resulted in a substantial rising of profits, resulting in a large number of enterprise income tax, faced with issues such as year-end cash dividends to shareholders. Net cash flows from the company’s own cash flow is far from sufficient to meet these expenses, cash flow shortage even more serious.Our current research scholars study cash flow and capital structure are mainly concentrated in the listed company or a certain industry. Few detailed in-depth analysis to an enterprise, to study and solve the practical problems which the enterprises faced with. In this paper, based on the relevant financial statements and the company policies of TE company in recent years, we aim to analysis of the situation of the cash flow and capital structure, investigate the cause of the shortage of cash flow, and from the deep level reason to start, choose an agreeable methods which is suitable for the development of the enterprise to forecast the company’s future capital needs preliminarily, and raise a capital structure optimization program ultimately. By financing activities to adjust the current unreasonable financing capital structure.After obtaining the fund, through the investment activities of the allocation of resources to form a reasonable assets structure. Reasonable asset structure can increase the company’s future cash flow, and ultimately form a reasonable capital structure, to promote a virtuous cycle of the company’s operating, investment and financing activities.