Financing and Purchase of Micro Enterprise of Cotton Processing Based on Inventory Financing

Abstract

In order to obtain optimal pledge quantity, this paper analyzed and constructed the financing and purchase model of micro enterprise of cotton processing based on the inventory. The model regarded the profit function as objective function, which includes the sales revenue, the cost of production, the holding cost of product, the holding cost of materials, and interest. We can obtain the pledge quantity and the total profit through the model. Chinese banks and other financial institutions have developed a series of proprietary products for cotton, furniture, silk and livestock industries. This paper is mainly on micro cotton processing enterprises. Such micro processing enterprises mainly characterized by small scale and weak in strength. Greater demand for funds in the production phase, when companies in the traditional way to plant, land and other real estate loan application charges against the bank from the financial security point of view, comprehensive assessment of enterprise value is less than the mortgage loan application, actual loans amount does not meet the business needs. Domestic and foreign scholars have already started funding constraints on the operation of enterprises related research issues. However, due to micro cotton processing enterprises of agricultural products processing enterprises in the procurement of raw materials has a strong seasonality, listing a large number of raw materials purchase prices tend to be lower, such as lower prices will have to miss a higher price in the purchase from vendors. Therefore, the timing of such enterprises purchasing significance. This paper is an object of study due to poor management, the urgent need of financing micro cotton processing enterprises in the purchase price of raw materials, a large market that is low, no cash for the purchase of raw materials, the company has only lint stocks (hereinafter are replaced with finished goods inventory) and no seed stock (inventory of raw materials used are below replacement). In order to purchase raw materials at lower prices, the company used part of the inventory of finished products inventory financing, procurement of raw materials and maintaining access to capital to continue