Research On The Impact Of Financial Flexibility On Enterprise Value Evaluation

Since the introduction of the housing reform policy,the degree of marketization of China’s real estate industry has been continuously improved,and the real estate industry has gradually become a pillar industry of China’s economy,while driving the development of other upstream and downstream industries.In recent years,many problems in China’s current economic development are related to the real estate industry.Especially since the real estate policy constraints were obvious in 2017,the confidence of the people in the real estate industry has been fading,and investors have also taken huge risks due to the instability of the industry.Therefore,in order to gain insight into China’s economic cycle and the development prospects of the real estate industry,and optimize the allocation of market resources,this paper will study the financial situation and value creation of enterprises in the real estate industry.Firstly,this paper studies the relevant literature of enterprise value evaluation and sorts out three basic methods of enterprise value evaluation;Then,by using SWOT and PEST management models to analyze the internal and external environment of Poly’s development,it is found that the external environmental policy factors have a great impact on the real estate industry.As the leading enterprise in the real estate industry,Poly’s development has strong industry competitiveness,relatively stable financial dynamics,strong ability to use financial flexibility,and good development potential.Because the real estate industry has the industry particularity of "high leverage and high debt",it can not be considered from a flat evaluation perspective,which separates the relationship between the real estate enterprise and the industry ecology and the macro-economy,and separates the subordination between the local and the whole.Therefore,this paper will choose a two-stage free cash flow model to evaluate the enterprise value from two dimensions of financial flexibility and traditional perspective,combined with the characteristics of the industry.Since financial flexibility is mainly divided into cash flexibility and debt flexibility,which respectively affect the prediction of the cost of working capital and equity capital,this paper will get two evaluation results,and then study the impact of financial flexibility management on enterprise value according to their differences.In the case analysis part,this paper takes Poly Development as an example.The benchmark date is December 31,2021.From the perspective of financial flexibility,the values of the parameters are adjusted on the basis of the original model.By analyzing the financial report data of the enterprise in the past 10 years,the industry dynamics and corporate public opinion are collected,and the linear regression equation is established with SPSS software to reasonably predict the future financial data,and the enterprise value in the prediction period is evaluated,Finally,the enterprise value based on the benchmark date is 372.1 billion.This result is compared with the evaluation results obtained from the traditional perspective in order to provide reference for the value evaluation of real estate enterprises.Through this study,the following conclusions are drawn:First,the importance of financial flexibility to the internal management of real estate enterprises.This paper quantifies the specific value of financial flexibility,and makes corresponding analysis according to the changes of industrial policies,highlighting the importance of real estate enterprises’ ability to reserve financial flexibility.Second,this paper improves the prediction direction of traditional financial indicators.Cash flexibility mainly acts on the net working capital of enterprises,and debt flexibility mainly acts on the capital structure of enterprises.It is found that the evaluation value can more scientifically and reasonably reflect market expectations.Third,because of the impact of the COVID-19 on the current macro-economy,the real estate industry has become increasingly depressed.This paper takes Poly Development as an example.The overall value of the enterprise on the benchmark date is lower than the valuation results obtained by using the two-stage free cash flow model of the enterprise,indicating that the stock price of the real estate enterprise is undervalued.However,from the perspective of the development of the current market situation,the real estate industry is bound to return to the normal value level gradually.