under normal circumstances, the financing cost index is expressed by the financing cost rate: financing cost rate = capital use fee ÷ (total financing-financing cost). The financing cost here is the cost of capital, which is the object of analysis in the financing process of general enterprises. However, from the perspective of modern financial management concept, such analysis and evaluation can not fully meet the needs of modern financial management, and we should consider several other related costs of financing in a deeper sense.

the first is the opportunity cost of enterprise financing. As far as the internal financing of enterprises is concerned, it is generally used "free of charge", and it does not need to actually pay the financing cost (mainly refers to the financial cost here). However, from the perspective of the average income of various social investments or capitals, the retained earnings of endogenous financing should also be paid after use, which should be no different from other financing methods. The only difference is that endogenous financing does not need to be paid externally, while other financing methods must pay externally. The financing cost of endogenous financing represented by retained earnings should be the profit rate of common stock, but it has no financing cost.

followed by risk cost. The risk cost of enterprise financing mainly refers to bankruptcy cost and financial distress cost. The bankruptcy risk of enterprise debt financing is the main risk of enterprise financing, and the loss of enterprise value related to enterprise bankruptcy is bankruptcy cost, that is, the risk cost of enterprise financing. The cost of financial distress includes legal, management and consulting fees. Its indirect costs include financial difficulties affecting the business ability of enterprises, at least reducing the demand for enterprise products, and the inability to make decisions without the permission of creditors, and the time and energy spent by management.

finally, corporate financing must also pay agency costs. There will be a principal-agent relationship between the users and providers of funds, which requires the principal to supervise and encourage in order to restrain the agent's behavior, and the resulting supervision cost and restraint cost are the so-called agency cost. In addition, users of funds may also make investment behaviors that deviate from the maximization of clients' interests, thus resulting in overall efficiency loss.

Tips: The above contents are for reference only.

Response time: February 28th, 2121. Please refer to the latest business changes announced by Ping An Bank in official website.