Starting from this week, we will update the module course of enterprise financing taught by Professor Chen Jinrong, a student of Tsinghua University Economic Management Department.
The first lecture is an introductory course, which mainly helps students to define a company, and then analyzes the current financing difficulties of the company, and puts forward the capital strategic management model that the company should pay attention to and learn from the perspective of capital. In the next course, Professor Chen will explain the sub-models and their internal relations in detail.
The following are the notes from the first class.
First of all, go back to the source and get to know the company again.
I want to start this course from the difficulty of enterprise financing, which is a very important topic in enterprise financing. In China, especially for small and medium-sized enterprises and entrepreneurial enterprises, financing difficulty is a very realistic problem.
First of all, we should consider the problem from our own enterprises. Let me ask you a question first-
What is the difference between an enterprise and a company?
1. Enterprise type.
An enterprise is an organization that we set up for business activities and profits. As an enterprise, there are three types:
The first type: sole proprietorship.
The second type: partnership.
The third type: company.
When we talk about corporate finance today, we obviously mean companies and enterprises. Companies and enterprises are also divided into limited liability companies and joint stock companies.
From another angle, from the concept and category, the company should be one of the organizational forms of our enterprise. What is the difference between a company and a sole proprietorship or partnership?
The company is an independent legal person, enjoying corresponding legal rights and bearing legal responsibilities. Of course, correspondingly and most importantly, the company has the right to raise funds from the society.
Therefore, in terms of the number of people, such as joint-stock companies, there are no restrictions on people, and they can publicly issue shares and raise funds.
At the same time, as a legal person enterprise, it has double tax obligations. As a company, you have to pay taxes related to the company. At the same time, as its shareholders, we have to pay personal income tax when paying dividends. Therefore, we should pay attention to the fact that companies and enterprises have to pay double taxes, which is different from partnerships.
So, first of all, define the topic we are going to talk about today. We are talking about enterprise finance, not all enterprises are included.
2. What is the company?
Furthermore, since we are talking about corporate financing, let me ask you the second question. What is a company?
Today our course is finance, and we are going to talk about capital. What is a company from the perspective of capital?
Companies are commodities.
Attention, everyone. I'm here to help you define your position and understanding of the company.
The first position, first of all, everyone must have a position in running a company, that is, the company is a commodity. More strictly speaking, the capital market has commercialized the company.
As a joint-stock company, the performance of ownership is our stock. Your share is stock. When we buy and sell stocks, we are essentially buying and selling the ownership of the company. So listing financing is a process of selling companies. Merger and acquisition is the process of buying a company. Buy one, sell one, and financing investment constitute two main lines of enterprise financing.
So, in a nutshell, a company is a commodity. Note that this is not only a theory, but also an idea. Why? When I chat with you on the ground floor, students often say: Company, I raised it since childhood. Everyone thinks that when I was a child, I raised a company and could not buy or sell it. If you can't cross this threshold, you can't solve the problem of financing difficulties.
If we want to solve the financing problem, it means doing business in two markets.
The first market, commodity market, is familiar to everyone.
The second market, the capital market, may not be so familiar to you.
So from the positioning point of view, through the first positioning "the company is a commodity", I want to emphasize that if you are an enterprise, you must be an enterprise in the commodity market and the capital market.
This will bring a second orientation, or ask a question. As a company, where does the company's capital and money come from? We must first know where to find money and who has money in his pocket. Let's calculate, whose pocket do we usually find money and financing from?
We must first think of banks, which will lend us money, which is an act of debt. But how can you be in debt? You have to have capital first.
Shareholders are the first to provide funds for everyone. Shareholders provide us with initial capital (equity), from which we can borrow money. That is, funds can also come from creditors, which is the second source.
We took the money, invested in machinery and equipment, started production, sold the products to customers, and asked customers to provide us with funds. This is the third source.
There are also suppliers and distributors. The financial accounts of our enterprise include accounts payable and accounts received in advance. This is commercial financing, your upstream and downstream, that is, your interest partners. This is the fourth source.
Who else can provide us with funds? Government, this is the fifth source. In fact, the government not only provides funds, but also provides us with many resources and policies. For example, tax policy, now on the basis of tax cuts in the United States, we are also reducing taxes. In fact, this is also a kind of funding.
Let's summarize. It is not only borrowing that can provide funds for enterprises. Shareholders, creditors, customers, interest partners and the government. We can put them in a package and call them "investors", which are investors in a broad sense.
Some students say that my business is too small. Can I go to the government? Whether it can be implemented has nothing to do with the size, but with everyone's ideas. Let's first feel that these five types of investors are standing outside the company before investing in a company. Is it related to our company only through investment?
The second position I want to talk about is simply called "jumping out of the enterprise to be an enterprise" and jumping out of your company to be this company. What do you mean? If I stop thinking about how to make money and talk about profits every day, don't look up and integrate the resources of external investors, no investors will invest in you.
Therefore, we should jump out of the company and think about what our company should do and how to operate from the perspective of investors. Everyone thinks that if the company we do meets the requirements of investors, you have growth and can bring him benefits in the future, and investors will definitely be willing to invest in you.
Looking back, we are enterprises in two markets. We should start from the way that we only know how to make profits in the commodity market, jump to the capital market and think about how to do business from the perspective of investors.
So, let's emphasize two positions. First, the company is a commodity in the capital market. Second, we should jump out of the company and operate the company in the capital market. Only by adjusting our thinking can we solve the financing problem.
Second, the six major challenges of corporate financing
We have to compare the difference between the goods in the capital market (that is, our company) and the goods we operate in the commodity market, and what are the characteristics of operation, so as to truly understand what the challenges we face in financing are.
What we do in the commodity market is commodity trading, and what we do in the capital market is company trading. Then, we regard the company as a commodity, and as a commodity in the capital market, what kind of challenges does the capital market bring to everyone?
Feature 1: The company is a non-standard commodity.
Challenge 1: How to establish a unique corporate culture?
Every enterprise looks different from every enterprise, and every company is different. The most obvious thing is that the company's industry is different, the company's scale is different, and its external performance is different. As a commodity, the first characteristic of a company in the capital market is that it is a non-standard commodity.
The more nonstandard and unique a nonstandard commodity is, the more valuable it is to invest. What is the most essential difference and uniqueness as a company?
Back to the concept of company and enterprise, we say that company and enterprise are an organization first. Since it is an organization, there are many people in the company. Every company has different people, different pursuits, different goals and different ideas.
The more I hope my company is not standardized, the more I want to do a good job in corporate culture. In fact, what is the most fundamental difference between every enterprise and every enterprise? It is the difference of corporate culture. As a non-standard commodity, a company must have enough scarcity and uniqueness to be attractive and valuable in the capital market. This challenge is how to build a unique corporate culture.
Feature 2: Only when the three powers are separated can the company buy and sell.
Challenge 2: How to ensure the expected return of the company?
We have a completion point in the commodity market, manufacturing products or providing services. How long will it take to cut the ribbon in three years after this product is manufactured or after a project is completed, 10 years?
Think about it, if we regard the company as a commodity, what can we talk about? I can't. The company can't go bankrupt. Theoretically, as soon as we set up this company, we will manage and do it every day. Then when can we sell this company? Or when does it mark the maturity of this company, a marketable commodity with investment value?
The answer is when the three powers of your company are separated. What are the three powers? Ownership, decision-making power and management right. This is also the second characteristic of the company as a commodity in the capital market, that is, only companies with separation of powers can buy and sell.
In fact, all our listed companies have undergone share reform. The significance of share reform lies not only in turning other types of enterprises into joint-stock companies, but also in the separation of powers.
Why do we have to separate the three powers to buy and sell companies?
For example, a classmate said, I have a company. I invest in my own business, I am a shareholder, I am a boss and I am an operator. But now I want to go public. Because we are all classmates, I will sell some of them to you for subscription first.
However, he still has three powers. If everyone subscribes for his shares, it means that everyone has bought ownership, decision-making power and management rights. My company is very profitable, especially profitable. Would you like to subscribe? I don't want to go.
Why? Because this classmate sold his company when the three powers were integrated, so this classmate didn't run it himself, and someone else ran it. Business philosophy, strategy and business model may change, so is this company still profitable? Will it be profitable in the future? Not necessarily. Because the market doesn't depend on everyone's idea, maybe after you change the founder's practice, the company will make more money, but it may lose money.
What do we invest in? Investment company's past or company's future? All investors invest in the expected income of the company, that is, the future of the company.
Therefore, I only buy and sell ownership, that is, stocks, only transfer ownership, and the decision-making power and management right remain unchanged, which can ensure that the company's future expectations can be realized. Therefore, decentralization ensures the continuous profitability of this enterprise. The CSRC has such a regulation that a company to be listed will have major changes in its directors, supervisors and senior executives, and it will take three years to go public.
For example, your company is going public, and as a result, your general manager has pulled a group of people to start their own businesses. Investors have reason to suspect that the new general manager and his management team may or may not welcome this change after changing their strategy and business model. So, we have to wait three years to see if he can bring back profits.
Note that the purpose of decentralization is to ensure the continuous profitability of enterprises. That is to say, in the commodity market, we are talking about the expected income and whether it will be profitable in the future.
In short, another challenge brought by the company as a commodity is whether you have the expected income.
Feature 3: The company can be split and sold.
Challenge 3: How to do a good job in corporate governance
We buy and sell goods as a whole, usually as a whole. However, the company as a commodity can be divided and sold. You can buy 5 1% and 100%, and the listing requirement is that you must sell no less than 25% of the shares.
Therefore, we should pay attention to this third feature. The company's goods can be sold piece by piece, not necessarily all. This brings a question: I have sold my equity, can I still control this company?
Remember the "Wanbao dispute" (Vanke and Baoneng)? The ownership and control of a company can be separated. Those who contribute capital do not necessarily control the company, and those who control the company do not necessarily contribute capital.
This feature also requires everyone to do a good job in the top-level design of the right balance in the commodity market, that is, corporate governance.
If my governance structure is not well designed, I may lose control of this company if I go to finance. And you hold this control tightly every day, and investors can't get in. Therefore, the challenge brought by the detachable and saleable characteristics of the company is the problem of governance structure.
Feature 4: There is uncertainty in the company's value.
Challenge 4: Uncertainty of future earnings
If you want to reach a deal with the products and services you produce, the most important thing is the price. All people who buy goods must think it is particularly worthwhile and accept your price before they can conclude a transaction. Therefore, we say that goods must be valuable. And the company to clinch a deal, buying and selling, also need the company valuable? From this, we can see how much the company is worth, which is a problem.
Commodity pricing is easy. With the materials, labor and expenses invested in manufacturing this commodity, plus our expected profit, the addition process can price the commodity.
How is the company priced? First of all, let's consider the characteristics of company value. Is the company value a fixed number? Since the day we set up the company, we have actually been trading in the company, and its value changes every day, which can go up or down. There is an upward trend this year, and it may fall next year. In other words, one characteristic is that the value of the company is uncertain.
Then how do we price the company's goods? We can artificially choose a time point, assuming that at this time point, the company remains unchanged, the company no longer operates, and the value is fixed at this point. The value of the company is reflected in the hard work, time and money of all operators, as well as the things that everyone has invested. When we invest energy, time and money, the financial affairs of this enterprise will show how many assets, how much income and how much profit there are. According to the profitability of assets, choose a certain pricing method, and then the value of the company can be determined.
First of all, the value of the company is uncertain. We chose a point in time artificially. At this point in time, we will look at the profitability of the company's assets and adopt certain methods for pricing. The value of a company is different in different periods. Different values, different prices; With different prices, everyone's financing amount is also different.
So there is a saying that "time is the soul of Wall Street". Time is of the essence in the finance of our whole company. Because of time, we can look to the future. As I said just now, investing is investing in the future. You may make a profit or lose money in the future.
The fourth challenge brought by this operation is risk. What is risk in finance? An organization will encounter many risks, such as political risks, market risks and so on. But what are the financial risks? Especially the uncertainty of the company's future earnings.
We are happy to sell the company and raise money. Investors must look at the future risks.
Feature 5: Value Marketing
Challenge 5: Accounting Statements
Did you brag when you were selling goods in the commodity market? In the commodity market, we should talk about commodity marketing. In the capital market, another feature of the company is value marketing. Moreover, this kind of value marketing is not done well, and the company can't sell this kind of goods.
There are many methods of value marketing, such as roadshows and information disclosure, to let investors know the investment value of the company. This brings the fifth challenge. The core and key of all value marketing depends on how much assets, income, profits and liabilities your company has. We must read the statement. We are a non-listed company and make an annual report every year. A listed company shall disclose its monthly, quarterly, semi-annual and annual statements.
When banks lend money to enterprises, they should also read the statements first. Therefore, to do a good job in value marketing, the core and key challenge is to do a good job in accounting statements.
Feature 6: Talk about two-way strategy.
Challenge 6: Need to innovate business model
The sixth question that needs everyone's consideration is how to coordinate the commodity market and the capital market. How can we do a good job in commodity market and capital market at the same time?
Therefore, in the commodity market, we should be strong and talk about industrial strategy. In the capital market, what can finance and support the development of the company? Capital strategy.
We invest and raise money in the capital market, just talking about our capital strategy, how to get money, how to cheat money and how to package it. How do investors feel in the capital market? You really came to brag.
Therefore, in the capital market, another feature of the company is that it must talk about two-way strategy.
First of all, you should explain the industrial strategy clearly, how to develop this industry and enterprise, and solve the five major problems mentioned above. How to have expectations, how to guard against risks, how to have more investment value, personality and core competitiveness, that is, in the capital market, you must first explain your industrial strategy clearly.
Then, you can talk about how much money you need, what you will do, your future goals and the results you will achieve based on this industrial strategy, so that investors will invest in you.
Therefore, in the capital market, we must not only talk about capital strategy, but also talk about two-way strategy. Since we are talking about a two-way strategy, we only operate in the commodity market, regardless of capital, and we know our own business model very well. But when we add finance and capital, the challenge we face is an innovative business model, which is to consider the model of industry+capital.
It turns out that we only consider the industry, so we need to increase capital today. This is everyone's sixth challenge.
Third, the strategic management model of capital
In the previous content, we first distinguish the company from the enterprise and reposition the company. Then we talked about the challenges we face in two markets, namely commodity market and capital market. Therefore, we need a strategic plan based on capital market and commodity market.
Today we don't talk about strategic planning, just talk about finance. Under the strategic planning, we should take a look at our capital strategy. It is a capital strategy linked by finance, finance and accounting. Attention, everyone, we are not only talking about capital operation, but also the strategy of operating capital based on the whole enterprise capital market.
From the perspective of capital, regardless of the size of the industry, everyone is busy with three things in the operation and management of an enterprise:
The first thing-business activities. The company is a profit-making organization. Business activity is to make money, which is the first thing that everyone is busy with.
The second thing-investment activities. If you want to make a profit and make money, you must do the second thing, that is, spend money.
The third thing-financing activities. If you want to operate and invest, you must do the third thing, and that is to find money.
As an enterprise, it is a busy process of business activities (making money), investment activities (spending money) and financing activities (finding money), and it is also the financial decision-making process of the whole enterprise. Let's analyze this process in detail, so as to sum up the management mode of our capital strategy.
1. Financial management
1. 1 cash flow
Let's start with the most familiar operation management. Business activities mainly include supply, production and sales. Let's take a look at the capital behind these major commercial activities.
In the supply stage, enterprises have machines, equipment, factories and office buildings, which constitute the long-term funds of enterprises. At the same time, the enterprise has raw materials, spare parts and low-value consumables, which are the reserve funds of the enterprise.
In the production stage, production and processing, paying taxes and wages are called production funds.
In the sales stage, when products are sold, monetary funds are formed.
Therefore, in the whole operation and management, enterprises will form four streams.
What we are busy with every day is business flow. What we can see and count is logistics. What we don't see is capital flow. We are leading the flow of human resources. Business flow, logistics, capital flow and human resource flow are the four major flows of enterprises.
For us, it is important to look at the flow of funds behind it. For example, by the end of the year, the general financial accounting is 654.38+0.5 billion revenue minus 654.38+0 billion cost, with a profit of 5 billion. But from the perspective of capital, we should not look at the profit first, but should look at how much money the company spent in 20 17, how much money it recovered, and how much money it can use for reinvestment.
From such a perspective, we can regard supply, production and sales as the heart of an enterprise. Capital conversion, recovery and reinvestment born from the heart are the blood of an enterprise. What flows in the veins is the blood of a company, not the cash flow. This is the financial significance of production and marketing, which makes our funds move.
1.2 capital chain
However, this also creates problems. Investment, recycling, reinvestment, continuous circulation, enterprises will not grow tall and strong soon. Enterprises must eat like people, that is, financing. By borrowing debt financing and equity financing, we can obtain funds and then invest in enterprises. The enterprise used to produce 100 tons, but now it can produce 500 tons. If you invest again and again, it will be even bigger.
What is the profit? Profit is the blood created by the heart of production and marketing activities. Part of the profits will be drawn from the enterprise to pay dividends and interest. For example, the profit share of 5 billion yuan 1 billion, and the rest can enter the enterprise again.
Therefore, we should pay attention to the fact that production and marketing activities are also financing activities. We call it endogenous financing, which is made internally. Through external financing, we call it exogenous, such as equity and debt financing.
It must be pointed out that commercial activities are also financing. An enterprise must have its own business activities and a profit-making mechanism for hematopoiesis in order to find funds from outside. China people say that "it takes hard work to strike while the iron is hot". This is what I call a two-way strategy. First, enterprises should understand the internal financing behavior (for production and marketing activities) before they can talk about external financing behavior.
To sum up, the capital flow of an enterprise can be divided into two parts, and the capital flow used for production, marketing and business activities is our cash flow. The capital flow formed by endogenous financing (profit reinvestment) and exogenous financing (debt/equity financing) is the capital chain of enterprises.
Therefore, through operation management, we will form a process of internal fund management, that is, financial management, which is divided into two management: cash flow management and capital chain management. If an enterprise has a high level of financial management and manages cash and funds well, it can improve its operating efficiency and obtain better profits, which is a process of improvement. Everyone should experience it in combination with their real business.
2. Accounting statements
At the end of each year and the beginning of each year, I am very busy and have to attend the annual meetings of various companies. Everyone began to summarize, personal summary, company summary. The accountant will also give you a summary. How come? Accountants should prepare accounting statements for everyone according to certain accounting policies.
How did you make it up? I still suggest that everyone take their seats accordingly.
If you are responsible for investment and financing, your business activities will be put on the balance sheet.
If you are in charge of marketing, R&D and office, put it in the income statement.
If you are the general manager, you should be most concerned about the safety of the company. The most unsafe thing is that there is something wrong with your blood, and that is the cash flow statement.
Sit in the right position, whatever you care about, your business behavior will be put in which report.
The accounting statements quantify our business activities, and all your business activities can be found in the accounting statements. This brings financial analysis. Looking at management through statements is a requirement for our internal managers. Looking back at your operation and operation management through the report, you should be very clear about where you did well and where there were problems. According to this problem, we can make a business plan for next year. Therefore, for internal managers, it is necessary to look at management through reports.
3. Corporate Finance
For a company, how to integrate the resources of external investors and how to get money is the core of corporate financing. It is the most basic way to let external investors know the value of your company through accounting statements and information disclosure.
We want investors to know the investment value of our company, so we tell investors through information disclosure that the industrial operation part of our company has special investment value and will bring you good expected returns in the future. We can also control risks, and investors will be willing to invest in us.
Investors can give you investment by making you fool? No, so investors will do value analysis. Investors should ask themselves, is it worth investing in his industry? Therefore, looking at the story behind the data through the data is the purpose for external investors to read the report. See if your industrial management has core competitiveness, future expectations, risk control and so on. , that is, the six challenges we mentioned before.
Look at the story behind the numbers through reports. what do you think? The income statement and cash flow statement show investors the intrinsic value of the company. The company has a good profit and cash flow on its statement, but these are not enough. You also need to see if your company's business model is unique by looking at supply, production and sales. Is it healthy to focus on production and marketing? Can blood and cash flow be made?
Hard indicators (cash flow statement and profit statement) and soft power (operation management and business model) are intrinsic values. Income statement and cash flow statement are statements that impress investors psychologically. In other words, this is a statement that excites investors.
However, heartbeat is not completely equal to action, and it needs more in-depth understanding and analysis. The balance sheet presents expectations to investors and shows whether it will be profitable in the future.
So the income statement and cash flow statement look at the past, not your intrinsic value. The balance sheet focuses on the future and shows the expected income. The isomorphism of the two forms the investment value of this company, that is, the company value.
Everyone must sit in the right place. From your point of view as a manager and entrepreneur, link the whole enterprise capital together and consider the problem I said. I'm talking about the financial strategy of finance, accounting and financial linkage. This picture shows the management mode of capital strategy.
To sum up, we can see that the management system of capital strategy consists of four parts. They are business management, financial management, accounting statements and corporate finance.
The whole model is:
Starting from industrial management (operation management),
Form the management of internal funds (financial management),
Compiling statements (accounting statements) according to certain accounting policies,
Expose these statements to external investors, and they will conduct value analysis and decide to invest in you (corporate financing).
The internal management of the company conducts financial analysis to improve our operation management and financial management. All capital is to promote the development and management of our enterprise, which is the capital management system of the enterprise.
The capital management strategy consists of three sub-strategies:
The first sub-strategy: how to manage internal cash, funds and capital is the internal financial strategy.
The second sub-strategy: how to disclose information and how to prepare statements, which is the accounting strategy.
The third sub-strategy: how to integrate external resources is a financial strategy.
Generally speaking, the management mode of capital strategy consists of a vertical line (capital management system) and three sub-strategies (accounting strategy, financial strategy and financial strategy).
Ok, that's all for the first lecture. In the next few classes, I will teach you the internal relationship between sub-strategies and their respective priorities.