Research on the Robustness of Debt Financing Strategy: a Financial System Engineering Perspective

From the perspective of financial system engineering, financial robustness refers to the ability of financial system that copes with change. Frequently, those factors which lead to changes result in the instability of systematic robustness. In this paper, a quantitative research is conducted to disclose the robustness of debt financing system and its strategy. Based on the goal of business value maximization combined with some key stochastic constraints of financial early warning as well as Z-score model, a linear programming analytical model (acronymed as MRDF) is established. Moreover, the numeric solution of the model is figured out by Lingo Software. It is concluded that, the MRDF framework can help both loaner and debtor businesses to properly formulate their debt financing strategy to realize their business value maximization and prevent financial risks.