“The company's debt maturity structure has undergone major adjustments in 2008: in 2007, the company's liabilities were all current liabilities. In 2008, the company effectively utilized financial leverage and added 70 million yuan of long-term bank loans.†Zhengzhou Huajing Diamond Li Jigang, the financial controller of the company limited by shares (hereinafter referred to as "Hua Jing Diamond"), told the reporter of China Accounting News. It is precisely this adjustment that makes Huajing Diamond truly the road to strengthening: the total profit in 2007 was 28.4571 million yuan, and the total profit in 2008 increased to 49.317 million yuan, a sharp increase of 73.30% compared with 2007. In 2009, the total profit reached 613.387 million yuan, a year-on-year increase of 24.38%; the market share also increased year by year, from 4.21% in 2007 to 7.45% in 2009. There are indications that the bank is the “diamond†required for Huajing Diamond to take off.
Bank loan "building foundation"
Huajing Diamond is mainly engaged in research and development, production and sales of synthetic diamond and raw and auxiliary materials, as well as research and development of synthetic diamond synthesis equipment. “Before 2008, the company was limited to a small scale of its own funds. The development relied mainly on commercial credit to raise funds, and the structure of the source of funds showed short-term characteristics.†Li Jigang said. It is understood that Huajing Diamond did not have a bank loan before 2008, mainly relying on accounts payable, advance receipts, etc. to finance. At the end of 2007, Huajing Diamond's accounts payable balance was 4,178.1 million yuan, accounting for 53.83% of its current liabilities. In 2008, Huajing Diamond and China CITIC Bank [5.36 -0.74%] Co., Ltd. Zhengzhou Branch signed the "RMB Loan Contract" with a loan amount of RMB 7 million and an annual interest rate of 5.4%. 2008 to 2011.
“Although the company has rapidly expanded its technology leadership in recent years, its market share has increased year by year, but it is difficult to meet the need to quickly occupy market share by relying on its own accumulation. Therefore, the company carried out capital increase and bank loans and bank loans in 2008.†Li Jigang According to the introduction, “funding funds has provided guarantee for the further expansion of the company's production capacity. The company has successively carried out technological transformations on existing equipment. In 2009, the newly added capacity was 0.8 billion carats, and the production capacity was expanded to 420 million carats.†70 million yuan Long-term bank borrowing improved the liability structure of Huajing Diamond, and also enabled Huajing Diamond to truly realize the rational allocation of resources: From the perspective of asset structure, from the end of 2007 to the end of 2009, Huajing Diamond’s current assets accounted for the proportion of total assets. It is 16.75%, 38.46%, 25.42%; from the perspective of long-term and short-term debt structure, from the end of 2007 to the end of 2009, the ratio of current liabilities to total liabilities was 100.00% and 38.44% respectively. 31.09%. In other words, Huajing Diamond only solved the risk of mismatching the maturity of assets and liabilities after obtaining bank loans, and truly realized the reasonable matching of assets and liabilities. "The company's debt ratio is more proportional to the asset size." Li Jigang said.
Enhanced debt
At the end of 2009, Huajing Diamond's consolidated asset-liability ratio was 24.71%. "The company's long-term debt repayment risk and pressure is not large, the company does not have a realistic debt repayment risk." Li Jigang said.
"The company's outstanding profitability fundamentally protects the company's solvency." Li Jigang said that the profit before interest, tax, depreciation and amortization realized by Huajing Diamond in 2007, 2008 and 2009 was 3,508,800 yuan and 5,906 respectively. 4.41 million yuan, 77.09.0 million yuan, "This shows that the company has a strong ability to repay interest due, and the solvency has increased year by year." In recent years, Huajing diamond products are more popular, some customers pay first Picking up, which makes its operating cash flow more abundant. The net cash flow generated by Huajing Diamond's business activities in 2007, 2008 and 2009 was 5,306,200 yuan, 29,906,800 yuan and 5,565,900 yuan respectively. “The abundant cash flow is an effective guarantee for the company to repay the debts due on time.†Li Jigang continued to analyze.
Li Jigang also analyzed that the ever-expanding asset scale provides a strong debt base for Huajing Diamond. As of December 31, 2009, Huajing Diamond's total assets reached 414.40 million yuan, of which fixed assets and intangible assets totaled 250.7722 million yuan, and its fixed assets and intangible assets were not mortgaged. “With the gradual development and growth, the maturity structure of the company's asset-liability structure and liabilities has been optimized, and financial leverage such as bank loans has been effectively utilized. At present, the company's asset-liability ratio is not high and remains at an appropriate level, and the company's solvency is strong.†Li Jigang said.
Bank acceptance bill
In addition to applying for bank loans to help improve its balance of assets and liabilities, Huajing Diamond has gradually emerged as a bank acceptance bill in its business activities since 2009. According to the data, in 2008 and prior years, the balance of Huajing Diamond's bills payable has been 0, but in 2009, the balance of bills payable was 100.36 million yuan, accounting for 9.8% of total liabilities. The largest liability item other than borrowing. It is understood that these notes payable are all bank acceptance bills. The use of bank acceptance bills saved the capital cost for Huajing Diamond. As of the end of 2009, Huajing Diamond's financial expenses were 935,400 yuan, accounting for 0.3% of its total operating costs.
Bank loan "building foundation"
Huajing Diamond is mainly engaged in research and development, production and sales of synthetic diamond and raw and auxiliary materials, as well as research and development of synthetic diamond synthesis equipment. “Before 2008, the company was limited to a small scale of its own funds. The development relied mainly on commercial credit to raise funds, and the structure of the source of funds showed short-term characteristics.†Li Jigang said. It is understood that Huajing Diamond did not have a bank loan before 2008, mainly relying on accounts payable, advance receipts, etc. to finance. At the end of 2007, Huajing Diamond's accounts payable balance was 4,178.1 million yuan, accounting for 53.83% of its current liabilities. In 2008, Huajing Diamond and China CITIC Bank [5.36 -0.74%] Co., Ltd. Zhengzhou Branch signed the "RMB Loan Contract" with a loan amount of RMB 7 million and an annual interest rate of 5.4%. 2008 to 2011.
“Although the company has rapidly expanded its technology leadership in recent years, its market share has increased year by year, but it is difficult to meet the need to quickly occupy market share by relying on its own accumulation. Therefore, the company carried out capital increase and bank loans and bank loans in 2008.†Li Jigang According to the introduction, “funding funds has provided guarantee for the further expansion of the company's production capacity. The company has successively carried out technological transformations on existing equipment. In 2009, the newly added capacity was 0.8 billion carats, and the production capacity was expanded to 420 million carats.†70 million yuan Long-term bank borrowing improved the liability structure of Huajing Diamond, and also enabled Huajing Diamond to truly realize the rational allocation of resources: From the perspective of asset structure, from the end of 2007 to the end of 2009, Huajing Diamond’s current assets accounted for the proportion of total assets. It is 16.75%, 38.46%, 25.42%; from the perspective of long-term and short-term debt structure, from the end of 2007 to the end of 2009, the ratio of current liabilities to total liabilities was 100.00% and 38.44% respectively. 31.09%. In other words, Huajing Diamond only solved the risk of mismatching the maturity of assets and liabilities after obtaining bank loans, and truly realized the reasonable matching of assets and liabilities. "The company's debt ratio is more proportional to the asset size." Li Jigang said.
Enhanced debt
At the end of 2009, Huajing Diamond's consolidated asset-liability ratio was 24.71%. "The company's long-term debt repayment risk and pressure is not large, the company does not have a realistic debt repayment risk." Li Jigang said.
"The company's outstanding profitability fundamentally protects the company's solvency." Li Jigang said that the profit before interest, tax, depreciation and amortization realized by Huajing Diamond in 2007, 2008 and 2009 was 3,508,800 yuan and 5,906 respectively. 4.41 million yuan, 77.09.0 million yuan, "This shows that the company has a strong ability to repay interest due, and the solvency has increased year by year." In recent years, Huajing diamond products are more popular, some customers pay first Picking up, which makes its operating cash flow more abundant. The net cash flow generated by Huajing Diamond's business activities in 2007, 2008 and 2009 was 5,306,200 yuan, 29,906,800 yuan and 5,565,900 yuan respectively. “The abundant cash flow is an effective guarantee for the company to repay the debts due on time.†Li Jigang continued to analyze.
Li Jigang also analyzed that the ever-expanding asset scale provides a strong debt base for Huajing Diamond. As of December 31, 2009, Huajing Diamond's total assets reached 414.40 million yuan, of which fixed assets and intangible assets totaled 250.7722 million yuan, and its fixed assets and intangible assets were not mortgaged. “With the gradual development and growth, the maturity structure of the company's asset-liability structure and liabilities has been optimized, and financial leverage such as bank loans has been effectively utilized. At present, the company's asset-liability ratio is not high and remains at an appropriate level, and the company's solvency is strong.†Li Jigang said.
Bank acceptance bill
In addition to applying for bank loans to help improve its balance of assets and liabilities, Huajing Diamond has gradually emerged as a bank acceptance bill in its business activities since 2009. According to the data, in 2008 and prior years, the balance of Huajing Diamond's bills payable has been 0, but in 2009, the balance of bills payable was 100.36 million yuan, accounting for 9.8% of total liabilities. The largest liability item other than borrowing. It is understood that these notes payable are all bank acceptance bills. The use of bank acceptance bills saved the capital cost for Huajing Diamond. As of the end of 2009, Huajing Diamond's financial expenses were 935,400 yuan, accounting for 0.3% of its total operating costs.
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