Research On Expanding Finacing Means Of CTZX Estate Com Pany Under Macro Regulations

More than six rounds of macro regulations have been enacted within the past 20 years since 1993, in order to establish the housing system based on allocation by market as well as ensuring of government, and to strengthen the construction and management of indemnificatory housing to meet the basic requirement of families with financial difficulties. Most of the real estate enterprises have to confront the slump in sales and funds circulation under the policies. The problem of insufficient funds needs to be solved to supply current projects and kick off potential ones, which is necessary to the sustainable development of enterprises.This Dissertation investigates the operation difficulties and financing issues of the state-owned real estate enterprises CTZX Company under the above regulations. The method of investment decision is adapted in this dissertation to financing decision in CTZX Company, according to capital structure theory.The optimal combination of equity financing and debt financing is presented, thus the minimum financial cost and maximum profit can be achieved.The ways of alleviating the financing predicament of CTZX Company with lower cost is found out through proper financing channel or combination of channels suited to its own conditions.Firstly, funding gap is calculated based on detailed analysis of CTZX Company’s cash flow in the next 7 years.External financing are proved to be critical for solving the bottlenecked funding problem.Secondly, repayment of investment is evaluatedwhile the funding gap is filled,in case ofequity financingwithout dividend to the investor, and debt financing respectively.Thirdly, the balanced proportion between the investor and the owner is estimated, by which repayment is equal between debt and equity financing.Then, the inequality 62.94%≤α≤72.16% is established, i.e., equity financing overwhelms debt one when the equity proportionαrequested by the investor is less than 62.94%, while vice versa when α is greater than 72.16. Both of them can be selected when α is between 62.94% and 72.16% for their similar level of profit.Finally, the optimal combination of equity and debt financing is presented in order to maximum profit of the owner.It is concluded that repayment of the owner reaches its optimal value 20.34% when 100 million of the 230 million financing gap is bartered for 68.64% equity. In fact, repayment keeps an ideal level, over 20%, when the total sum of equity financing is between 85 and 150 million.The methodology of selecting financing channels proposed in this dissertation equips CTZX Company with quantitative and feasible basis for saving financing cost and raising project profit. It can also be applied widely to similar real estate enterprises and other companies with financing demand.