Discussion on financial quality analysis of electric power enterprises
Abstract: In order to improve the benefit and efficiency of electric power enterprises and seek the sustainable development of electric power enterprises, it is necessary to analyze their financial quality. This paper analyzes the financial quality of electric power enterprises from four aspects: asset quality, capital structure quality, profit quality and cash flow quality.
Keywords: financial quality, financial analysis of electric power enterprises
In recent years, there are a series of problems in the financial quality of China's power enterprises. Electric power enterprises are capital-intensive enterprises, with huge total assets, and are under great repayment pressure and depreciation pressure. How to reasonably debt and reduce the cost of capital will become a major issue for power enterprises. In addition, there are many kinds of assets in power enterprises, the subject of property rights is unclear, the amount of accounts receivable is huge, a large number of non-performing assets suffer long-term losses, and the return on assets is low. Therefore, paying attention to the financial situation and analyzing the financial quality of electric power enterprises can provide managers of electric power enterprises with the direction to improve their operation and management, and also help investors and creditors make decisions.
First, the power enterprise asset quality analysis
1. Characteristics of assets of electric power enterprises
The assets of electric power enterprises have the following characteristics: ① There are many types, large quantities, high value and wide distribution of fixed assets. From the type point of view, it can be divided into more than ten categories, such as substation equipment, communication lines and equipment, transmission lines, distribution lines and equipment, electric energy metering equipment, maintenance equipment, buildings and land. From the distribution scope, where the power grid extends, the fixed assets are distributed to the corresponding places, and the scope is very extensive. ② Update quickly and change frequently. In recent years, the state has increased its investment in the power grid, and the transformation of rural power grid has been going on, with frequent changes in assets. In order to ensure the safe operation of power assets, power enterprises have to overhaul, transform and maintain all kinds of assets every year, and the cost is huge. ③ The asset structure is not balanced. The fixed assets of electric power enterprises account for a relatively large proportion, generally accounting for 70% of the total assets. Some power companies have high risk of asset structure because of huge external electricity charges, low return on assets and small proportion of quick assets to fixed assets.
2. Analysis of assets turnover of power enterprises
The role of asset turnover in enterprise development is generally realized through the profitability of enterprises. Enterprises with different asset structures have different asset turnover. Generally speaking, the turnover rate of current assets is relatively faster than that of major companies, and the turnover rate of fixed assets is relatively slower than that of major companies. It should be noted that when analyzing the turnover of the company's assets, we should also pay attention to whether it is in a relatively stable state.
Return on total assets can measure the utilization efficiency of all assets of power enterprises. The higher the rate of return on total assets, the higher the efficiency of enterprises in using their assets. The higher the turnover rate of accounts receivable, the lower the bad debt loss and the stronger the short-term solvency. On the other hand, if the turnover rate of accounts receivable is low, the working capital of power enterprises will be too much delayed in accounts receivable, which will affect the normal turnover of funds.
Second, the power enterprise capital structure quality analysis
1. Debt Capital Quality Analysis
Usually, the capital structure of an enterprise consists of long-term debt capital and equity capital. For electric power enterprises, debt management is not absolutely good or bad. The low asset-liability ratio of power enterprises shows that their financial policies are more cautious. This conservative financial policy will make enterprises more financially secure, but they will not enjoy the tax benefits before income tax. On the other hand, if the asset-liability ratio of power enterprises is high, it shows that the financial policy of enterprises is more radical, which is conducive to reducing the weighted average cost of capital and exerting financial leverage. However, if the profitability of the enterprise is not good, it will lead to a decline in economic benefits because of excessive interest burden.
2. Quality analysis of equity capital
Equity capital is the most basic part of power enterprises, which can guarantee liabilities. If power companies do not have enough equity capital, they will face higher financial risks. Electric power enterprises are capital-intensive enterprises and need huge amounts of money. The shortage of funds has become an important factor that puzzles the development of electric power industry. Power enterprises can consider using the capital market for equity financing, and appropriately issue some new shares or rights issues.
Third, the power enterprise profit quality analysis
Higher profit quality generally means that the profit structure of an enterprise is basically reasonable, with strong ability to obtain cash and certain profitability in the future.
1. Quality analysis of profit composition
Generally speaking, the total profit of an enterprise consists of operating profit, investment income and the balance of non-operating income and expenditure. Operating profit should be the main source of enterprise profits, and the sustained and steady growth of operating profit shows that enterprises have good profit prospects. In the total profit, if the operating profit accounts for a high proportion, it means that the company relies on its main business. If the proportion of foreign investment income is high, it shows that foreign investment has become the main source of profit for the company. When this situation continues for several years, the company needs to seek outward development.
2. Quality analysis of cash realization degree
The ability to obtain cash plays a decisive role in the evaluation of profit quality of power enterprises. If the profit of an enterprise has a strong ability to obtain cash, the enterprise has enough ability to pay the profit. Among the sources of cash flow, business activities are an important guarantee of cash source. Therefore, the size of operating cash flow reflects the ability to obtain cash continuously, and then directly reflects the profitability of power enterprises.
3. Quality analysis of profit distribution
At present, the dividend distribution policies of listed companies in China are: paying cash dividends, paying stock dividends, not distributing dividends and mixed dividends. Dividends to investors are a return to investors and an important way for enterprises to show their confidence and attract investors. If an enterprise has a certain scale of profits to distribute, but does not distribute them, it will make investors doubt the profit quality of the enterprise. Whether the cash dividend distribution method can be adopted is also the performance of the cash flow ability of the enterprise. At present, the overall cash payment ability of power enterprises is strong, and the profit distribution space is large.
Four, the power enterprise cash flow quality analysis
1. Advanced traffic quality analysis generated by business activities
The amount of cash flow generated by business activities of enterprises directly affects the normal production and operation of enterprises and the repayment of short-term debts. If the cash flow generated by business activities is less than zero, it means that the cash inflow brought by normal activities such as selling goods and providing services is not enough to pay the corresponding cash outflow. This will make enterprises face the problem of tight funds. If the cash flow generated by the business activities of an enterprise is equal to zero, then the cash flow of the business activities of the enterprise is in a state of balance of payments and cannot provide cash for the investment and financing of the enterprise. Only when the cash flow generated by enterprise's business activities is greater than zero, can it be guaranteed that the cash flow is sufficient to support daily operations, and it can also have the ability to expand reproduction.
2. Quality analysis of cash flow generated by investment activities
If the cash flow generated by enterprise investment activities is less than zero, it means that the cash used by enterprises to purchase long-term assets and invest abroad is greater than the corresponding cash income, and the cash outflow generated by enterprise investment activities is greater than the cash inflow, which will lead enterprises to reduce the investment scale or use other cash flows to make up for it. If the cash flow generated by an enterprise's investment activities is greater than zero, it means that the cash inflow from investment activities is greater than the cash outflow. This situation needs to be analyzed in detail, which may be because it has entered a stable period of return on investment, or it may be because the return on investment was large in the past.
3. Quality analysis of cash flow generated by financing activities
If the cash flow generated by enterprise financing activities is less than zero, it means that the cash inflow of enterprise financing cannot support the corresponding cash outflow. When this happens, the enterprise may use the cash flow from investment activities or business activities for turnover, which is a signal that the enterprise raises funds improperly. If the cash flow of enterprise's fund-raising activities is greater than zero, it means that the fund-raising activities of the enterprise have been included in the development plan of the enterprise and are in a normal state.
As a traditional industry related to the national economy and people's livelihood, electric power plays an important role in national economic construction and people's life. Although the imbalance of power demand leads to the shortage of power supply and accelerates the development of power, the financial situation and quality of power enterprises still need to be improved.
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