FINANCIAL MANAGEMENT OF ASSET-LIABILITY RATIO OF SMALL- AND MEDIUM-SIZED ENTERPRISES IN DYNAMIC NONLINEAR SYSTEM

Ling Zhang, Bahjat Fakieh () and Li Shang
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Ling Zhang: NanJing XiaoZhuang University, Nanjing 211171, P. R. China
Bahjat Fakieh: ��Information System Department, Faculty of Computing and Information Technology, King Abdulaziz University, Jeddah, Saudi Arabia
Li Shang: NanJing XiaoZhuang University, Nanjing 211171, P. R. China

FRACTALS (fractals), 2022, vol. 30, issue 02, 1-10

Abstract: The purposes of this paper are to optimize the financial management methods of small- and medium-sized enterprises (SEMs) and deeply explore asset-liability ratio’s relevant theories. A medium-sized manufacturing enterprise’s financial conditions and the influencing factors of enterprise’s asset-liability ratio are researched by a dynamic model with two-way effects and the enterprises’ dynamic nonlinear simulation model. Meanwhile, capital injection’s impacts on asset-liability ratio are explored. The results show that different industries’ enterprise asset-liability ratios vary. The real estate enterprises’ asset-liability ratio is 61.35%, the highest, and the cultural communication industry is the lowest, 35.62%. Meanwhile, the asset-liability ratios of energy industry, manufacturing industry, and the wholesale and retail industry are also relatively high. The larger the enterprise’s scale, the higher its asset-liability ratio, long-term liability ratio, current liability ratio, and loan financing. The proposed simulation software performs satisfactorily in its application. The simulation system’s analysis shows that the target enterprise’s asset-liability ratio is gradually increasing, and its return on equity and capital turnover rate is decreasing, reaching the critical bankruptcy point in the 36th month. With a 20 million CNY capital injection, its asset-liability ratio decreases significantly, and return on equity increases steadily. In the 49th month, it resumes normal operations. The results provide a useful reference for subsequent research on enterprises’ asset-liability ratios and SMEs’ financial management.

Keywords: Financial Management; Enterprise’s Asset-Liability Ratio; Two-Way Effect Dynamic Model; Dynamic Nonlinear Simulation Model (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1142/S0218348X22400643

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