Capital Structure Of Enterprises Research Articles

Enterprise Long-term Development and Survival in The Crisis

The paper encompasses an examination of the challenges that small and medium-sized enterprises may face during periods of economic depression, as well as the essential capabilities required for enterprises to sustain long-term competitiveness in such circumstances. By comparing the operational strategies employed by companies that successfully weathered economic crises with those that went bankrupt within the same industry and timeframe, this study identifies key factors contributing to enterprise resilience in times of crisis. These factors primarily include research and development efforts towards new product innovation, optimization of enterprise capital structure, and investment in human capital. Additionally, this paper analyzes the feasibility macroeconomic environments across different regions or countries, consumer demand patterns and confidence levels, as well as human capital availability and skill sets. In this way, smes in different countries can find their own solutions to cope with the crisis during the economic depression.

Capital structure, business model innovation, and firm performance: Evidence from Chinese listed corporate based on system GMM model.

This paper aims to verify the impact of capital structure on business model innovation and firm performance and the mediating effect of business model innovation. We use the data of the Chinese growth enterprises market (GME) listed high-tech firms from 2016 to 2022 as a dynamic panel data model with the system-generalized method of moments (sys-GMM), adopting return on asset and earning per share as firm performance. Our results show that capital structure has a lag effect on firm performance. The total debt ratio in the last period has a significant non-linear impact on the performance and business model innovation level of nowadays, presenting a U-shaped relationship. The first-order lag short-term debt ratio positively improves firm performance. Business model innovation significantly promotes better firm performance, and business model innovation does exist in the mediating effect between enterprise capital structure and its performance. These results remain robust to different sample sizes or proxy variables. This paper proposes some suggestions for firm operations and government policies based on the findings.

Does FinTech reduce corporate excess leverage? Evidence from China

As a financial innovation driven by digital technology, FinTech has a significant impact on the traditional financial system and the real economy. Existing studies mainly focus on the application of FinTech in the fields of banking and capital markets, less attention is paid to the firm-level evidence, especially the discussion of enterprise capital structure. In fact, when a company’s capital structure has a high proportion of debt, it is considered overleveraged, which could produce devastating impacts on the sustainable development of firms and the entire capital market. This paper explores solutions to address corporate excess leverage from the perspective of FinTech. Using Chinese listed companies from 2007 to 2020 as a sample, we find that regional FinTech significantly reduces financing constraints and improves stock liquidity, which is beneficial for the alleviation of excess leverage The results hold after a battery of robustness tests. Moreover, the heterogeneity analysis shows that this impact is more pronounced for private enterprises and companies with a relatively low degree of capital market liberalization. This study aims to provide alternative solutions to avoid excess corporate leverage in China and other emerging economies.

DIAGNOSIS OF CAPITAL STRUCTURE AS A TOOL FOR ADMINISTERING THE FINANCIAL ACTIVITIES OF ENTERPRISES

The development of market transformations in Ukraine has led to the noticeable changes in the sphere of formation and using enterprise capital. Formation of the optimal capital structure, which allows to combine an increase in financial results with the existing risk level, is the main factor of maintaining effective functioning. In this connection, processes of financial activity administration require rethinking and improving the approaches to diagnosis of financing sources both in the theoretical and practical aspects. The aim of the study is to improve the methodological approaches to the diagnosis of enterprise capital structure as an instrument of justifying and making managerial decisions in financial management system on the basis of theoretical approaches and specifying the definition of the term “enterprise financial activity administration”. Methods of scientific cognition were used in the work, in particular: of system approach, analysis, synthesis, scientific abstraction, generalizing. Methods of financial coefficient analysis and Shuhart’s control charts creation were used to carry out capital structure diagnosis on the example of JSC “Zhytlobud-1” (Kharkiv). The author’s vision of the essence of enterprise financial activity administration as a process of developing and implementing managerial decisions was formed, including formation and use of its capital with the aim of financial strength, profitability and creating conditions for fulfillment of obligations, based on information, diagnostic and analytical support for the realization of managerial procedures. It was concluded that diagnosis of capital structure served as the key element in the system of instruments for the administration of enterprise financial activity. The use of Shuhart‘s control charts for diagnosing the capital structure was proposed, and relevant calculations were carried out on the example of JSC “Zhytlobud-1”, the level of manageability of its capital components was assessed, and key management objects in the structure of the company’s financing sources were identified. The results of the research can be useful for scientists, students of economic specialties of higher educational establishments, managers and employees of financial divisions of enterprises and financial institutions

Impact of Several Factors on the Change Speed of Capital Structure of Listed Firms in Vietnam

Information of capital structure and changes in capital structure plays an important role in corporate financial management. Many researches have shown that the information about changes in capital structure is meaningful and reflects firms' financial position in many aspects. Therefore, studying factors that affect the fast or slow change of firms' capital structure is also meaningful. Based on results of previous researches on the capital structure of enterprises and some proposals for researching impact of some factors on firms’ capital structure change, a regression model including the dependent variable and the 8 independent variables were selected. Data of 174 listed firms in Vietnam and other related data for the period 2015 - 2020 were collected to conduct an empirical research. Our research's aim to clarify the impact of factors including firm size, revenue, asset turnover, ROA, ROE, debt ratio, firm age and GDP growth on the change speed of capital structure of listed firms in Vietnam. Results of the regression analysis show a positive relationship between firm size, asset turnover, debt ratio, ROE and firm age with rapid or slow change of firms’ capital structure, while firms’ revenue has a negative relationship with this change speed. Implications the research's results, limitations and future research directions are discussed.

FEATURES OF ENTERPRISE CAPITAL FORMATION AND MANAGEMENT IN CONDITIONS OF ECONOMIC INSTABILITY

The paper examines methodological aspects of enterprise capital formation and management. Inaccuracies in this matter lead to the decline in development of business entities and, as a consequence, the economy in general, which should be stable to face today's challenges. Therefore, the purpose of our paper is to investigate the aspects and problems of the enterprise capital formation and management in the context of ensuring the effective production and economic activity of the enterprise in conditions of economic instability. The research reveals the presence of financially unstable enterprises in Ukraine , taking into account both the dynamics of their profits and the indicators of autonomy, which is exacerbated by the economic instability and leads to a decrease in business activity in the state. It determines that an important aspect in ensuring the effective activity of the enterprise is the optimal approach to the formation of its capital. The essence of capital and its role in the general system of enterprise management are described. The sources from which it is possible to ensure the process of capital formation and the requirements for its structure are outlined. In particular, it is important to have a variety of sources and prevent the predominance of borrowed capital over own capital, which can be achieved by effective management of working capital as a requirement of the enterprise productive forces development and the achieving of growing economic benefits. An expedient method and indicators regarding the analysis of the effectiveness of enterprise capital formation and management is proposed. There are horizontal and vertical assets and liabilities analysis and an assessment of the enterprise financial condition. It is emphasized that special attention should be paid to the effect of financial leverage, which makes it possible to assess the level of obtaining additional profit on one's own capital due to the use of various parts of loan funds in general enterprise capital structure. Understanding this is an important factor in finding the best solutions for the formation of enterprise capital. Estimation and regular monitoring of the enterprise capital state, according to the approach formed in this paper, is able to provide economic entities with the optimal volume of the resource base. This will maintain their expanded reproduction and will contribute to the development of the economy as a result of the effective functioning of economic entities.

Intellectual and financial business processes optimizing the structure and cost of capital in cost-oriented management

The primary task for Ukrainian enterprises at the current stage of their development is to develop and implement effective mechanisms to improve the well-being of owners, and, in order to be able to increase the market value, enterprises need to carefully monitor the business processes and take measures to optimize and increase efficiency. The purpose of the work was to generalize the use of intellectual and financial business processes to find the optimal capital structure according to the criterion of maximizing the market value of business. The methods of analysis and synthesis were used to define the optimal approach to determining the cost of enterprise capital, the method of structural and functional modelling of business processes to determine the structure of enterprise capital, as well as the method of systematization to form the areas of application of the CAPM model. The key business processes characteristic of modern Ukrainian enterprises have been built and directions of strategic cost-oriented management of enterprise capital structure in conditions of the external environment instability have been developed, which can be used in the practical activities of enterprises to increase the efficiency of their functioning. The modelling of business processes is combined with the development of directions of strategic cost-oriented management of the enterprise capital structure on the basis of their analysis. The use of an approach to modelling business processes by Ukrainian enterprises can allow planning the financial activities of the enterprise with high accuracy and take into account both strategic and tactical aspects of business development, allowing for the instability of the external environment and the high cost of raising capital. The results of the research can be useful for financial analysts and managers of enterprises of various forms of ownership, as well as for potential investors who consider the possibilities of investing in a certain business and are oriented towards making management decisions based on the analysis of business processes

The impact of stock market on enterprise capital structure in ASEAN developing countries

Capital structure is one of the topics in which business managers as well as academics are always interested, because it has many important implications. This problem in developing countries is even more relevant due to the low level of financial development in these countries, leading to uncertain access to external capital by firms. This paper focuses on the impact of stock market development on capital structure in five developing countries in ASEAN, namely Indonesia, Malaysia, Philippines, Thailand and Vietnam, for the period 2010 - 2018. Stock market development is measured in four different ways: Stock market capitalization to GDP (MACAP), total value of shares traded to GDP (LIQ1), total value of shares traded to stock market capitalization (LIQ2) and average of the three indexes (STOCK). The results show that development of stock market has different impacts on capital structure, depending on the measures used to reflect the stock market development. Specifically, MACAP, LIQ2 and STOCK do not reach statistical significance, while LIQ1 has a negative effect. In addition, firm size (SIZE), tangible assets (TANG), growth opportunities (TOBINQ), inflation (INF) and GDP growth (GDPGR) positively affect capital structure; while firms' profit (ROA) has negative effect. Based on the research findings, the research offers several implications for relevant stakeholders.

МОДЕЛЮВАННЯ ОПТИМАЛЬНОЇ ДИВІДЕНДНОЇ ПОЛІТИКИ УКРАЇНСЬКИХ КОМПАНІЙ

Актуальність теми дослідження полягає в тому, що для досягнення основної мети діяльності суб’єкта господарювання — отримання прибутку, такий аспект як розроблення раціональних пропорцій розподілу прибутку і вироблення оптимальної дивідендної політики, є одним з основних складових забезпечення ефективності діяльності підприємства. Метою дослідження стала розробка методичного підходу до визначення оптимальної дивідендної політики підприємств на основі залежності оптимальної норми дивідендних виплат від структури капіталу підприємств в Україні. Методологічну основу дослідження становить метод багатофакторного регресійного аналізу. На основі цього методу України розроблено поліноміальну регресійну модель складних зв’язків між нормою дивідендних виплат і показниками ефективності діяльності підприємств. Вибір підприємств здійснений за такими критеріями: організаційно-правова форма акціонерного товариства; підприємства здійснюють виплату дивідендів. Період дослідження — 2000—2018 роки. Для перевірки сценаріїв реалізації політики дивідендних виплат розраховано показник еластичності чистого прибутку підприємств, які сформували статистичну базу дослідження, від рівня дивідендних виплат. Для визначення оптимального рівня дивідендних виплат, за якого максимізується позитивний ефект (E = max), побудовано систему функції для різної структури капіталу підприємств і на основі проведення експериментів з цією системою визначено оптимальний рівень дивідендних виплат. Для визначення оптимального типу дивідендної політики, виходячи із рівня дивідендних виплат, оціненого у відсотках від чистого прибутку компанії, використано метод шкалювання за законом Фібоначчі. Розраховано діапазон кількісних рівнів дивідендних виплат досліджуваних компаній, відповідно до якого визначено тип оптимальної політики щодо сформованої структури капіталу компанії. Такий підхід дозволяє визначити відповідний тип дивідендної політики з урахуванням фінансового стану компаній з метою максимізації її ринкової вартості. Утилізує суб’єктивізм у процесі оптимізації дивідендної політики компанії і забезпечує достовірність результатів оцінки оптимального рівня дивідендних виплат. Сприяє підвищенню ефективності чистого прибутку компаній і нарощування потенціалу максимізації їхньої ринкової вартості.

Can core competence help enterprises to deleverage?—empirical evidence based on text analysis

This paper constructs the measurement index of core competence by text analysis method and empirically tests the influence of core competence on enterprise capital structure. We find that the stronger the core competence is, the lower the asset-liability ratio will be, which means core competence can help enterprises to deleverage. The mechanism test finds that the influence of core competence on enterprise capital structure is realized by enhancing profitability and increasing internal free cash flow, which supports the pecking order theory. Further research shows that (1) the influence of core competence on enterprise capital structure mainly plays a role in enterprises with high level of debt, indicating that core competence can play a positive role and effectively reduce the leverage ratio of high-leverage enterprises, and (2) the core competence can effectively reduce the leverage ratio of both state-owned enterprises and non-state-owned enterprises, indicating that core competence can play a positive role and achieve a full deleveraging. This paper clarifies the mechanism of core competence on enterprise capital structure, enriches the literature on the economic consequences of core competence and factors affecting enterprise capital structure, and provides scientific support for governments at all levels to implement the structural deleveraging policy accurately.

The enterprise capital structure management model

Purpose. To create management algorithms for the enterprises capital structure and mathematical formalization of optimization of this structure. To investigate the dynamics of changes in the share of profitable enterprises to assess, analyze and forecast changes in the capital structure of homogeneous groups of enterprises. Methodology. Both empirical and theoretical methods of cognition are used to conduct the research. Methods of scientific observation and comparison are used to form the topic of scientific work, goals and objectives of the study. Methods of analysis and synthesis, induction and deduction, abstraction are used to determine the essential features of capital structure management. Methods of system structuring and modeling are used to create a mathematical model. The analogy method is used to find the weight factor of the objective function. The axiomatic method and the method of convergence from the abstract to the concrete were used for the practical application of the mathematical model, in particular, to analyze the dynamic index of related companies, stratified by size, industry, and so on. Findings. The dynamics of the preconditions for changing the capital structure is studied, the regularities of this change for groups of homogeneous enterprises are revealed. The uneven influence of the crisis on the approaches to the formation of capital structure in groups of homogeneous enterprises is revealed, and the reasons for this are investigated. The similarity of tendencies of formation of capital structure in groups of inhomogeneous enterprises is pointed out. A correlation was found between the decrease in the share of equity and a significant prevalence of external borrowing with an increase in net loss. Moreover, it is established that enterprises, whose total amount of equity and current liabilities is stable and comparable in size with external borrowing, show a decrease in losses. Originality. Algorithms for capital structure management and a mathematical model for optimizing capital structure are proposed. A method of comparative analysis of changes in capital structure for homogeneous groups of enterprises has been introduced, which provides an opportunity to assess the impact of external risks and crisis factors in the past and predict the necessary changes in capital structure during both the new crisis and after the crisis. Practical value. The developed algorithms and mathematical model can be used in research and management practice to manage capital structure. Useful for different categories of professionals are approaches to the analysis of capital structure, the results of the analysis of the causes of change, the study on trends and their consequences for homogeneous enterprises.

Експлейнарний базис управління структурою капіталу підприємства

Анотація. У системі управління підприємством одне з головних місць належить системі управління структурою капіталу. Саме вона відповідає за пошук джерел для забезпечення діяльності підприємства та формування шляхів ефективного використання ресурсів для досягнення стратегічних цілей. Формування дієвого механізму фінансування діяльності підприємств потребує вдосконалення теоретичних та практичних аспектів, пов'язаних з управлінням капіталом підприємств як певною сукупністю його фінансових ресурсів. Метою дослідженняє визначення складових експлейнарного базису управління структурою капіталу підприємств. У статті розглянуто складові експлейнарного базису структури капіталу підприємств, що являють сукупність теоретичних основ та інструментів, які залучаються для оптимізації структури капіталу. Автором досліджено особливості терміну «капітал» в залежності від етапів розвитку економічної думки. Розглянуто підходи різних груп вчених щодо складових структури капіталу. Визначено роль інтелектуального капіталу в ефективній діяльності підприємства поряд з іншими виробничими факторами. Систематизовано погляди науковців щодо позиціонування складових сукупного капіталу в координатах зовнішнього та внутрішнього середовища підприємств. В роботі зазначено, що однією з складових експлейнарного базису є теорії структури капіталу, які відображають багатоаспектність тлумачення сутності цього об’єкту. Виходячи з цього було цього було сформульовано складові експлейнарного базису управління структурою капіталу в розрізі теорії компромісу,теорії агентств, теорії інформаційних витрат, теорії витрат на контракти, теорії відстеження ринку та надані тлумачення управління структурою капіталу. Результати дослідження сутності управління структурою капіталу мають стати теоретичною базою щодо наукового уявлення про його експлейнарний базис, сприяти подальшому розвитку теорії структури капіталу. У статті запропоновані підходи до системи управління структурою капіталу, які дозволять максимізувати ефективність господарської діяльності та забезпечити стабільне економічне зростання.
 Ключові слова: структура капіталу, управління структурою капіталу, експлейнарний базис, експлейнарний базис управління структурою капіталу

Simulation of the capital structure of an enterprise taking into account the dynamics of parameters of the external environment

Information technology is an effective tool for substantiating management decisions in any field of activity, including the economy. One of the most important characteristics of the functioning of economic agents in a market is the structure of their capital because the interest of foreign investors in the business entity depends directly on the balance of this structure. Therefore, the process of managing the capital structure of a business unit needs special attention both in terms of sustainable development and during the crisis. Given the mentioned above, the object of the study is the process of managing the enterprise capital structure. The study aims to improve the methodological support of the process of managing the enterprise capital structure taking into account the dynamics of the parameters of the external environment of its operation. As for the results of the research, the EPC diagram of the optimization process of the enterprise capital structure was developed. Due to the use of the vector graphic editor MS Visio, this model allows visually displaying the scenario of a financial manager’s activity during performance of his duties on the modeled subject area; the methodical approach to assessing the sustainability of capital structure management based on the building of Shewhart quality maps was suggested. Such maps enable to identify typical (optimal, preventive and control) values of the components of the capital structure of an entrepreneurial unit; methodical recommendations for operative management on an enterprise capital structure at the innovation and investment stage of its development were developed. They are based on the use of a method of linear programming. They allow defining possible deviations of capital structure indicators while retaining the control of the chosen strategy of its development.

Meta-study on relationship between macroeconomic and institutional environment and internal determinants of enterprises’ capital structure

The enterprise capital structure is influenced by internal factors, i.e., the share of fixed assets in total assets, the size and growth of the enterprise, its liquidity and profitability, and the non-debt tax shield. The literature shows that external factors – macroeconomic and institutional specifics of enterprises’ environment – may shape the strength and direction of these dependencies. The main aim of this article is to identify the relationship between external factors and the impact of internal determinants on the capital structure. The study includes the meta-analysis of papers which provide information on the relationship between internal factors and the capital structure for 35 countries. The study includes the papers published after 2000 whose research covered the period 1993–2017. A statistically significant relationship between four external factors (inflation, G.D.P. growth rate, G.D.P., index of protection of the creditors and debtors rights) and the strength and direction of the impact of internal factors on the capital structure has been found. In addition, the unambiguously negative impact of two internal factors (liquidity and profitability of the enterprise) on indebtedness was diagnosed. It also reveals that the pecking order theory constitutes a strong theoretical basis for research into the capital structure of enterprises.

The Determinants of Enterprise Capital Structure and Its Dynamic Influence—Based on Panel VAR Model

By using the panel data of quoted company during 2005-2014 and the PVAR model, this paper aims to empirically examine the dynamic and interacting relationships among Debt, Growth of company, PB of company’s stock, the Effective income tax rate. The pvar model can estimate the dynamic relationship of all endogenous variables, and the empirical results show that the Growth, PB and ETR are the critical factors of Debt; The PB’s ability to explain changes in the capital structure has grown stronger over time, and “invalid periods” may occur in the short term. Enterprise Growth and Effective income tax rates both have positive effects in the short term. At the early stage, the enterprises show the debt financing preferences. With the expansion of the scale, the enterprises slowly show the equity financing preferences.

Factors affecting capital size of enterprises in Dak Nong Province

The research focused on analyzing factors affecting capital size of enterprises in Dak Nong Province using multivariate regression model. Results show that business sector, import-export business, type of business registration, production and business location, age and share by other organizations in the capital structure of enterprises are determinants of capital size of enterprises in Dak Nong Province. Accordingly, the study proposes recommendations to local government so as to support enterprises, including: (i) promulgating and implementing priority policies for the development of agricultural sector and import-export business; (ii) encouraging private and one-member limited liability companies to expand their capital to gain the economics of scale; (iii) promoting investment in transport development, rural infrastructure to support enterprises; (iv) speeding up the implementation of the investment process and licensing progress for enterprises; and (v) calling for investment from the large organizations, enterprises and investors.

Determinants of the capital structure of TSL sector enterprises

Determinants of the capital structure of TSL (Transport, Spedition, Logistics) sector enterprises The capital structure has been of interest for researchers in the field of financial theory for over 60 years. However, literature surveys show that relatively few studies on the structure of capital and the factors shaping it can be applied to the TSL industry. The TSL (Transport, Spedition, Logistics) sector belongs to industries with a high development potential, both in the world and Poland. In order to meet the need for the diagnosis of the TSL industry in Poland, the research was undertaken to identify and examine the strength and direction of the impact of selected factors on the capital structure of enterprises in the TFL sector in Poland. The article consists of two parts. The first part explains the issues related to defining the concept of capital structure and includes identification of capital structure determinants based on the literature. The second part shows research methods, describes the sample, defines variables and presents results of the research. The enterprises listed on the NewConnect market were the subject of the research. It was to achieve the set goal that the correlation analysis and the linear regression method were used. Both correlation analysis and regression analysis have not confirmed the significance of all seven capital structure determinants. The correlation analysis has confirmed the significance of four determinants: asset structure, profitability, company size and financial liquidity. The regression analysis has also confirmed the statistical significance of the four determinants; these are: the structure of assets, size of the company, financial liquidity and the effective tax rate. The analysis of correlation shows that the level of indebtedness is positively correlated with the size of the enterprise and profitability, while negatively, with the structure of assets and financial liquidity. In turn, the regression analysis shows that the level of indebtedness is positively correlated only with one variable: the size of the enterprise, while negatively with the three variables: the structure of assets, financial liquidity and the effective tax rate.

Analysis on the Factors Affecting the Capital Structure of Small and Medium-Sized Enterprises in China

The capital structure of small and medium-sized enterprises is closely related to enterprise financing. At present, the capital structure of small and medium-sized enterprises in China is unreasonable. There are disadvantages such as low proportion of internal financing, single external financing channels and excessive short-term liabilities. The theory of enterprise capital structure studies how the enterprise arranges its capital structure in its development or contraction, which means how the enterprises determine the ratio of their own capital, equity capital and debt capital in order to maximize their market value. In other words, how to find the optimal capital structure of the enterprise is the central task of the theory. This paper starts from the economic environment and characteristics of small and medium-sized enterprises, discusses the internal and external factors affecting the capital structure of small and medium-sized enterprises and puts forward the countermeasures and suggestions for optimizing capital structure of small and medium-sized enterprises.

ОПТИМІЗАЦІЯ СТРУКТУРИ КАПІТАЛУ ПІДПРИЄМСТВА

The article investigates the theoretical and methodological foundations of optimizing of the enterprise capital structure. The essence of the categories «capital» and «capital structure» of the business entity is determined. A comprehensive analysis of scientific approaches to their interpretation, as well as methodical methods of optimizing the capital structure, the characteristics and components are identified are highlighted. The groups of methods of this process are studied: normative-coefficient, single-criteria and multicriteria, their key advantages and disadvantages are considered. Normative-coefficient methods include methods based on the use of financial ratios. When forming the capital structure, the coefficients average values in the respective industry are taken into account as a reference point. The main single-criteria searching methods for optimality in the capital formation sources structure are investigated: maximizing the financial profitability level using the financial leverage mechanism, minimizing the cost of capital, minimizing the financial risks level. Restrictions for finding the optimal ratio of own and borrowed funds are consolidated into an one multi-criteria system. Based on these methods, the PE «EVROSEM» capital structure is optimized. Taking into account the problem of achieving a capital components rational proportion based on simultaneous compliance with the several optimization criteria requirements a target capital structure complex indicator based on industry affiliation is developed, which is a weighted average value with the specific weights of each method in the integral assessment of the equity and borrowed funds ratio. Prospects for changing of the PE «EVROSEM» market value when reaching a strategic capital structure are outlined, which consist in the fact that by increasing the share of own funds in their total volume, based on the economic added value mechanism, it is possible to obtain an increase in the enterprise market price.

Real Estate Enterprise Capital Structure Analysis and Optimization—The Case Study of Kaisa Group

Real estate industry is one of the pillar industries of the national economy. As the real estate industry develops rapidly, this capital-intensive industry’s funds demand is soaring. Therefore, in order to guarantee the healthy development of the real estate industry, a reasonable structure of enterprise capital is very important. From the perspective of corporate capital structure, this article takes Kaisa as an example for analysis. Kaisa’s financing activities in recent years are combined to understand the overall financing situation, and then adopt relevant financial indicators to analyze Kaisa’s solvency comprehensively. After the defects of capital structures are identified, several suggestions in optimizing capital structure will be given.