What are the characteristics of financial management of small and medium-sized enterprises?

Financial characteristics in the initial stage

The business risk is the highest at the beginning of the enterprise life cycle, because the product has a short time to market, a single product structure, limited production scale, high product cost and poor profitability. At the same time, the development and market expansion of new products need to invest a lot of money, and it is uncertain whether the expansion of product market can give products enough room for full development and compensate the cost of investment, and the core competitiveness has not yet formed. Judging from the influence of financial management activities of small and medium-sized enterprises on the cash flow of enterprises, operating activities and investment activities are in a state where the outflow is greater than the inflow, and the net cash flow is negative, so it is difficult to form the accumulation of internal funds, and financing activities are the only source of cash. This is the financial feature of start-ups.

Financial characteristics of maturity

When small and medium-sized enterprises successfully cross the initial stage, they will enter a relatively stable mature stage. In the process of enterprise maturity, the ratio of enterprise growth rate to prospect and operational risk will fall back; Enterprises have a relatively high and stable product market share, and the accounts are constantly recovered, which has a high capital turnover efficiency; At the same time, due to fewer new projects and less cash outflow, the net cash flow of enterprises is mostly positive, and the business activities and investment activities of enterprises generally show net income. The financing scale is lower than the initial stage, and the current stage is mainly based on retained earnings and debt financing policies. A large number of debts have reached the repayment period, and with the increase of debt financing, financial risks have risen to a level equivalent to operational risks. The dividend ratio is also increasing. A high ratio of cash to net profit per share will increase the dividend rate and payment amount. At this time, investors' returns are more satisfied through dividends than capital gains in the initial stage.

Financial characteristics in recession

For declining enterprises, the decline of business and the demise of products are inevitable, and the opportunity for profit reinvestment is very small. The purpose of doing business is only to continue to seek a turning point for survival. Judging from the influence of financial management activities of small and medium-sized enterprises on cash flow, due to the decline in product sales level and slow cash flow, business activities have obvious negative cash flow. At the same time, due to the high dividend distribution policy adopted by declining enterprises, debt financing will continue to increase during the recession, fund-raising activities will produce positive cash flow, and financial leverage and financial risks will also increase accordingly.