Profitability analysis of enterprises Part I: Profitability analysis of iron and steel enterprises in Henan Province Abstract: From the perspective of profitability, this paper analyzes the profitability of Anyang Iron and Steel Co., Ltd. from four aspects: operating profitability, asset profitability, capital profitability and income quality, and analyzes its comprehensive profitability with the help of principal component analysis, so as to make listed iron and steel enterprises in China have a correct understanding of their profitability and provide useful reference for the further development of iron and steel enterprises.
Keywords: iron and steel enterprises; Profitability; principal component analysis
I. Introduction
As an important basic industry, iron and steel industry has made important contributions to the development of industrialization and urbanization in China. After decades of development, China's iron and steel industry has made remarkable achievements, and China's iron and steel output has been greatly improved not only in quantity but also in quality. However, at present, China's steel production is basically balanced in terms of total supply and demand, but in terms of steel product structure, the contradiction is very prominent, traditional products are surplus, and high value-added products are in short supply. Therefore, compared with developed countries, there is still a certain gap in the competitiveness of steel products. From the perspective of profitability, this paper analyzes the profitability of Anyang Iron and Steel Co., Ltd. from four aspects: operating profitability, asset profitability, capital profitability and income quality, so that listed iron and steel enterprises in China can have a correct understanding of its profitability, thus providing useful reference for the further development of iron and steel enterprises in China.
Second, data sources and indicators selection
(1) data source
The data in this paper comes from the financial statements of Anyang Iron and Steel Co., Ltd. from 2002 to 20 10 published by Shanghai Stock Exchange.
(2) Index selection
In view of the poor operating performance of listed companies in China's steel industry, this paper chooses four aspects to analyze the profitability of Anyang Iron and Steel Co., Ltd.: operating profitability, asset profitability, capital profitability and income quality.
Third, the profitability index analysis
According to the financial statements of Anyang Iron and Steel Co., Ltd., the above four indicators can be calculated, and the specific values are shown in table 1.
Table 1: profitability index data of Angang
(A) analysis of operating profitability
As can be seen from the above table, the 9-year average operating net profit rate of Anyang Iron and Steel Co., Ltd. is 3.8 1%, with higher operating net profit rates in 2002, 2003, 2004 and 2007. Other years are relatively low, especially in 2008, 2009 and 20 10, far below 1%. As can be seen from the above data, the operating net profit rate of Anyang Iron and Steel is still relatively low and the distribution is relatively scattered. The highest and lowest are far from each other, and the accumulation ability of self-owned funds is insufficient. In a word, Angang should focus on improving management level, improving profitability and accelerating the accumulation of its own funds.
(B) Analysis of the profitability of assets
As can be seen from the above table, the average net interest rate of total assets of Anyang Iron and Steel Co., Ltd. in 9 years is 7. 17%, which is higher in most years, and the net interest rate of total assets in 2002, 2003 and 2004 is higher; The years are relatively low, especially in 2008, 2009 and 20 10, which are far below 7. 17%. In short, the net interest rate of total assets of Angang is still relatively high in most years. In the future, we should pay attention not to blindly pursue asset scale and ignore the profitability of assets.
(C) Analysis of capital profitability
As can be seen from the above table, the average return on equity of Anyang Iron and Steel Co., Ltd. in 9 years is 5.4%, which is relatively high in most years, and the return on equity in 2002 and 2003 is relatively high; It was relatively low in several years, especially in 2008, 2009 and 20 10, all of which were far below 5.4%. In a word, the return on equity of Anyang Iron and Steel is still good. In the future, we should pay more attention to the adjustment of capital structure, weigh operational risks and financial risks, and constantly enhance the value of shareholders.
Income quality analysis
Generally speaking, when the remaining cash guarantee multiple is greater than or equal to 1, it means that the profit of the enterprise is guaranteed by cash flow. As can be seen from the above table, the average cash guarantee multiple of the 9-year surplus of Anyang Iron and Steel Co., Ltd. is 23.29, most of which is greater than 1, and the cash guarantee multiple of the surplus in 2009 is higher; It is relatively low for several years, especially 20 10. In a word, the overall profit structure of Angang is reasonable, but unstable, and the highest and lowest are far from each other. While improving profitability and achieving cash balance, the company should pay attention to the appropriate adjustment of profit structure to ensure the stability of the company's profits.
Fourth, the comprehensive analysis of profitability.
With the help of SPSS 16 software, the profitability of Angang is comprehensively analyzed by principal component analysis. Principal component analysis (PCA) is an attempt to recombine many related indicators (such as P indicator) into a new set of unrelated comprehensive indicators to replace the original indicators. We import the data in table 1 into SPSS 16 software, and we can get the total variance, component matrix and principal component score sorting table.
The 1 principal component we extracted can explain the total variance by 79.383%, which means that the analysis has 79.383% reliability. As can be seen from Table 3, the principal component is a comprehensive reflection of these four indicators, and we can get the expression of the principal component, that is, y = 0.989x 1+0.99x2+0.99x3-0.487x4. Finally, the data in Table1are substituted into the principal component expression to get the ranking table of the principal component scores. As can be seen from Table 4, Anyang Iron and Steel had the best profitability in 2003, followed by 2002 and 2004, and other years were relatively poor. In fact, Angang was selected as the 9th listed company 100 in 2002 and the 9th listed company 100 in 2003 by the performance evaluation research group of China listed companies composed of Zhonglian Assets Appraisal Company, Zhonglian Financial Consultant Co., Ltd. and SASAC. Since 2008, the world economy has been affected by the subprime mortgage crisis in the United States, the contradiction between supply and demand and rising costs, and the profits of the steel industry have been declining. Therefore, our analysis results are basically consistent with the facts.
Verb (abbreviation of verb) conclusion and suggestion
By analyzing the profitability of Angang, it can provide useful reference for the development of China's steel industry. China's iron and steel industry has a low degree of concentration and production specialization, which can't reach the prospect of economies of scale. The average technical equipment level of iron and steel enterprises is low, the structure is unreasonable, and the task of technological transformation and industrial upgrading is very arduous; The low degree of concentration and specialization of iron and steel enterprises and the backward level of technology and equipment lead to high production cost of iron and steel products in China; The quality of steel products is low. All these factors have led to the decline of the profitability of China steel industry. With the slow recovery of the world economy, China's steel industry should constantly explore market space, and promote the steady, healthy and rapid development of the steel industry through a series of measures and means such as joint restructuring, elimination of backwardness, energy conservation and emission reduction, and industry norms.
References:
[1] Zhu,. Financial analysis course. Peking University Publishing House, 2009.
[2] Guo Xianguang. How to use spss software for principal component analysis [J]. Forum on Statistics and Information, 1998.
Analysis of Enterprise Profitability Part II: Research on Activity-based Profitability Analysis Method Abstract: Balanced Scorecard (BSC) combines financial indicators and non-financial indicators to provide a new performance analysis method, but BSC method is still not perfect in theory and reality, which is worth discussing. This paper analyzes the hidden problems of BSC method and introduces Marshall? W? An activity-based profitability analysis method proposed by Mr. Meyer.
Keywords: balanced scorecard ABC ABPA
The trap of balanced scorecard
Robert? Kaplan and David? Norton put forward the balanced scorecard theory in 1992. The most prominent feature of this theory is to link the enterprise's vision, mission and development strategy with the enterprise's performance evaluation system, and to transform the enterprise's mission and strategy into specific goals and evaluation indicators, so as to realize the organic combination of strategy and performance. Based on enterprise strategy, BSC includes four dimensions: financial indicators, customer perspective, internal processes and learning and growth. On the one hand, BSC enables organizations to track financial achievements, on the other hand, it pays close attention to intangible assets that enable enterprises to improve their capabilities and gain future growth potential, so that enterprises can not only reflect? Hardware? Financial indicators, but also to win in the competition? Software? Indicators.
Modern enterprises strive to build a balanced index system: the connotation of non-financial indicators it contains can supplement the content of enterprise performance that financial indicators can not reflect. However, the competitive environment of enterprises is so changeable that they can always find the real one? Look ahead? Non-financial indicators? The process of determining BSC index system (especially non-financial indicators) is bound to have inherent subjectivity, and enterprise management must be able to control and control the uncertainty brought by this inherent subjectivity. The uncertainty brought by subjectivity must be that employees doubt the rationality and fairness of their performance information, salary reward and promotion development under BSC system. This has formed an inexplicable combination: on the one hand, enterprises hope that the non-financial indicators in the BSC system can supplement the financial indicators as much as possible; On the other hand, the subjectivity in the determination of BSC indicators is easy to cause disputes about the rationality of internal assessment and rewards and punishments.
From ABC cost accounting method to activity-based profitability analysis
The generation of ABPA
ABPA originated from activity-based costing, which is the smallest unit form of cost calculation: it can determine the actual cost of labor, raw materials and so on. Need to deliver products, serve customers and maintain business. ABPA extends ABC. ABPA pays attention to customers, who are regarded as the intersection of cost and operating income. The core question of ABPA is: How should an enterprise provide services to customers whose operating income exceeds the cost? For example, banks, some customers have fund agency, insurance commission, check business and other businesses in banks. Other customers, however, just put their wages in the bank and can't bring much income.
Components of ABPA
ABPA has four core elements: enterprise activities, activities-related costs, customers and operating income.
Enterprise activities are customer-oriented, and these activities cause activity costs, while customers provide enterprise benefits. The relationship between activities, costs and operating income can be fully understood at the customer level, not at the level of business units or enterprises as a whole. Customers are the biggest profit center of an enterprise.
ABPA pointed out that if enterprises want to make profits, they should either use the cost-leading strategy, or find out those unprofitable customers, and then re-price or encourage them to trade elsewhere. ABPA encourages enterprises to find customers who can bring long-term benefits to enterprises and put their interests at the core of their concern. Enterprises should promote and refine the transactions and products that are conducive to profitable customer relationships, and abandon those chicken-rib businesses that are helpless to their core businesses. Building a comprehensive customer-oriented system based on customer activity cost and customer profitability can provide enterprises with organizational advantages that competitors cannot surpass.
Therefore, it is very important to find out the transactions and products that contribute to profitable customer relationships. The simplified process system is as follows:
The first step is to subtract the current customer profitability, customer net operating income and the cost of current transactions and products as a function of previous transactions and product utilization. The second step is to reconfigure transactions and products to maximize the profitability of customer relationships. This can be achieved by using specific transactions and products and restricting or repricing other transactions and products. The essence of ABPA is to use ABC to estimate the profitability of each customer, and then distinguish those products and services that are attractive to customers and can bring a lot of returns to enterprises from those that cause a sharp increase in costs.
How to find the driving factors of business income through ABPA
ABPA mode can find profitable products and services, which requires the system to track all transactions between customers and owners and the costs incurred. In order to simplify the process, customer transactions are first divided into customer-initiated transactions (foreground transactions) and support transactions (background transactions). Then, find out the direct activities (business activities) and indirect activities (supervision and allocation activities) of these transactions, and then determine the cost amount one by one according to the actual cost input of movable property and real estate. Finally, the cost is divided into: short-term variable costs sensitive to customer transactions (front desk staff); Long-term variable costs (supervision) that are somewhat sensitive to transactions; The production capacity cost caused by the increase of fixed assets when the transaction is enlarged. Accordingly, enterprises should encourage and guide those profitable customers to further bring benefits to enterprises according to the cost base; Divert unprofitable customers who account for a large share of the cost, redesign their service processes and save resources.
Advantages and disadvantages of ABPA
Comparison between ABPA and Balanced Scorecard
From the measurement standards and units: BSC is aimed at the financial achievements and non-financial standards of enterprises and institutions; ABPA analyzes the customer profitability and customer transaction profitability of segmented customers. Performance drivers: financial standards are measurable, and the drivers of BSC's financial results are well known; ABPA must reanalyze and find out the driving factors of these enterprises' operating income. Salary management: BSC is based on financial and non-financial comprehensive evaluation factors; ABPA is to create customer profitability and customer transaction profitability based on employees' individual remuneration and contribution to the team and organization as a whole. In the dimension of learning and growth: BSC, through the comprehensive application of financial and non-financial standards, makes the enterprise strategy and core competitiveness land, and the direction of the enterprise becomes clear; With the accumulation of experience, ABPA promotes the profitability of customers more and more deeply. Technical realization: Financial standards in BSC are obviously more definite and easier to measure than non-financial standards. On the other hand, ABPA must be close to customers and track their business income and transactions, which is sometimes costly.
Strategic advantages that ABPA can bring.
ABPA provides detailed cost and operating income data to centralized customer sales and service departments so that they can rely on these data to make strategic choices. ABPA opens the way for decentralized decision-making. Secondly, ABPA enables front-end units and back-end units to pursue different but complementary strategies. The fierce market competition makes it more and more difficult for enterprises to attract customers' attention only by relying on low-cost or differentiated strategies. Now more enterprises choose to take the middle road of combining differentiation and low cost.
Limitations of ABPA
ABPA itself does not exclude non-financial measurement standards, but ABPA is only effective when non-financial measurement standards can be used by a single customer. ABPA needs a system that can always pay attention to customer transactions, and the cost it brings is unbearable for ordinary small enterprises. Without professional analysts to analyze the data, enterprises may go to the other extreme. In addition, ABPA itself has its own unsuitable scenarios: when performance measures are used to show commitment and value, rather than leading indicators to measure future cash flows, ABPA and frameworks similar to ABPA are also difficult to apply.
ABPA itself is not perfect, but more of an ideological and theoretical system. Marshall? W? Mr. Meyer also admitted that the system has not been fully utilized, and more people need to participate in the research and go deep into the enterprise. However, the introduction of this concept has brought us a new perspective of performance evaluation.
References:
1. Marshall w? Meyer (USA). Beyond the balanced scorecard, reflect on performance evaluation. Machinery Industry Press, 2005.
2. Peng Jianfeng. Introduction to Human Resource Management (M). Fudan University Press, 2003.
Profitability analysis of enterprises Part III: Profitability analysis of children's pharmaceutical enterprises Abstract: Profitability of enterprises is an important indicator to measure the development of enterprises, and financial analysis is not only the premise of financial forecasting, but also a summary of past business activities and profitability of enterprises, which plays a connecting role. Make a comprehensive judgment on the company's financial statements together with the macro-economy, and compare them with the company's history in the vertical depth and with the same industry in the horizontal width, so as to obtain substantive information related to decision-making, so as to ensure the correctness of investment strategic decision-making, and thus analyze the national economic benefits of the project on the basis of financial benefit analysis of the project. Therefore, this paper mainly analyzes the profitability of Kangzhi Pharmaceutical from the strategic and financial perspectives.
Keywords: competitive strategy; Overall strategy; profitability
I. Background
Hainan Kangzhi Pharmaceutical Co., Ltd. is the only listed company focusing on children's drugs in China, mainly engaged in research and development, manufacturing and business in the field of children's drugs. Kangzhi Pharmaceutical now has four production bases in Hainan, Beijing, Hebei and Shenyang. After years of careful construction and accelerated development, Kangzhi Pharmaceutical has gradually taken shape? Kang zhi? In 20 13 years, the total profit of kangzhi pharmaceutical increased by 13. 18% compared with the same period of last year, and it was successfully selected as one of the top 500 Asian brands. There are 100 kinds of medical products. At present, Kangzhi Pharmaceutical's research and development ability in the field of children's medication has been at the leading level in China.
Harvard analysis framework analyzes the financial situation of enterprises from a strategic perspective, analyzes the opportunities and threats existing in the external environment of enterprises, analyzes the advantages and disadvantages of internal conditions of enterprises, and points out the direction for the future development of enterprises in scientific prediction. Harvard analysis framework is a financial analysis framework put forward by three Harvard scholars, which mainly includes strategic analysis, accounting analysis and financial analysis. This analytical framework combines quantitative analysis and qualitative analysis, which can effectively grasp the direction of financial analysis.
Second, strategic analysis.
1. competitive strategy analysis
There are two general competitive strategies: one is cost-leading strategy, and the other is differentiation strategy. Kangzhi Pharmaceutical Co., Ltd. mainly adopts differentiation strategy, specializing in the research, development, production and sales of children's drugs. The reasons and advantages of Kangzhi Pharmaceutical's differentiation strategy are as follows: First, drugs can be fully differentiated. Secondly, the demand for differentiated products is huge, that is, children's medication. Thirdly, Kangzhi Pharmaceutical has strong research and development capabilities. Finally, Kangzhi Pharmaceutical has strong marketing ability. .
In a word, Kangzhi Pharmaceutical has achieved and maintained its competitive advantage by increasing the types of drugs used by children, improving the internal and external packaging of children's drugs, and continuously investing in research and development, brand image and goodwill.
(1) product differentiation competition
The competition mode of pharmaceutical industry has a great relationship with the classification of drugs. Patent famous drugs have market monopoly, and through high prices and expanding market sales, the investment can be recovered and certain or even high profits can be obtained; Kangzhi medicine market is a market and channel mainly for children's medicines. The company is mainly engaged in the research and development, production and sales of children's drugs. It covers six categories of western medicine and Chinese patent medicine, such as antipyretic and analgesic, cold, antibiotics, respiratory system, digestion and spasmolysis, and nutrition, which are the biggest sales in children's medicine at present. In addition, it also owns 17 adult drugs.
(2) Relative monopoly competition
Patented new drugs are the commanding heights of pharmaceutical competition, and the world pharmaceutical market is characterized by local and temporary monopoly of new drugs. Due to illness
Complexity, different diseases need different drugs to treat, even if the scope of action of each drug on the same disease is different, which makes drugs show great differences and diversity. An enterprise can monopolize a patented new drug market, but it is impossible to monopolize the whole drug market or a certain kind of drug market. At the same time, due to the timeliness of patented new drugs, they will face competition from imitations after the patent expires. Kangzhi Pharmaceutical Co., Ltd. currently produces and operates five kinds of children's medicines1/kloc-0, covering six categories of western medicine and Chinese patent medicine, such as antipyretic and analgesic, common cold, antibiotics, respiratory system, digestion Ding Jing and nutrition. At present, many drugs rank first in domestic similar products and children's antipyretic and analgesic products. It can be seen that some areas of Kangzhi Pharmaceutical have achieved monopoly.
(3) Scale advantage competition
The pharmaceutical industry is a high-tech, high-risk, high-input technology-intensive industry, which combines advanced technologies and means of various disciplines. The process of new drug research and development is costly, time-consuming, difficult and low in success rate, so enterprises need considerable scale and strength to engage in new drug research and development and improve their ability to resist risks; Generic drugs, especially APIs, need to rely on scale operation to gain cost advantage. Therefore, medical capital presents a trend of centralization. Kangzhi Pharmaceutical Co., Ltd. is mainly engaged in the production of children's medicines. Judging from the overall pattern of the pharmaceutical market, the share of children's medication only accounts for about 25% of the overall pharmaceutical market. Therefore, it is necessary to expand the remaining 75% market share and have a complete product structure in the pharmaceutical market. 20 1 1 In June, the company raised more than 80 million yuan, continuously invested in Tianhe Pharmaceutical, and continuously expanded its production scale. This is the necessity of reasonable adjustment of market structure, and at the same time, scale competition is gradually realized.
2. The overall strategic analysis of the enterprise
As can be seen from the company's annual financial report, although Kangzhi Pharmaceutical specializes in the research and development, production and sales of children's drugs, about 40% of its income and one-fifth of its profits come from adult drugs, and it also involves the food industry. Belonging to the diversified management of the pharmaceutical industry.
On the one hand, Kangzhi Pharmaceutical has some resources, such as brand, proprietary technology and scarce distribution channels, which can reduce the transaction costs within the organization and have economies of scale. On the other hand, the proprietary resources of Kangzhi Pharmaceutical can be well matched with its business portfolio. For example, in 2011July, Kangzhi Pharmaceutical acquired and subsequently increased its capital by1.800 million yuan (1.000%). Yanfeng Pharmaceutical Co., Ltd. has a number of children's medicines, and Yanfeng Pharmaceutical Co., Ltd. also has ferrous sulfate syrup and other children's pharmaceutical preparations, which supplements Kangzhi Pharmaceutical's existing children's series in the fields of iron supplementation and cough treatment.
Third, financial analysis.
1. Measure the overall profitability
According to the 20 12 annual report issued by Kangzhi Pharmaceutical Co., Ltd., the profit level of Kangzhi Pharmaceutical Co., Ltd. in 20 12 has been greatly improved compared with the previous year. During the reporting period, the company achieved an operating income of 366 million yuan, a year-on-year increase of 19.22%. The net profit attributable to shareholders of listed companies was 22.6 million yuan, a year-on-year increase of 540.23%.
2. Profitability decomposition: alternative methods
When the return on net assets is decomposed, the operating factors and financing factors are decomposed as follows (the data is in the form of ratio): in 20 12, the operating net profit rate is 6. 17%, the turnover rate of operating net assets is 19.47%, and at the same time, the return on operating assets = operating net profit rate? Net assets turnover rate, operating assets return rate is1.2%; Interest margin 10.2%, net financial leverage 4.59%, financial leverage income = interest margin? Net financial leverage, financial leverage income is 0.47%; ROE = ROE of operating assets+ROE of financial leverage, and ROE is 1.67%. At the same time, the annual data of 20 1 1 are obtained. Net operating profit rate 1. 15%, net operating assets turnover rate 16.5 1%, operating assets return rate 0. 19%, interest margin 9.34% and net financial leverage 5.66.
According to the data analysis, the return on operating assets of Kangzhi Pharmaceutical in 20 12 was significantly higher than that in 20 1 1 year, so the overall return on net assets increased significantly. The increase in the rate of return on operating assets is mainly due to the increase in sales revenue. 20 1 1 At the beginning of the year, it was reported that nimesulide, an antipyretic drug for children, may lead to the death of children, which caused great waves in the whole country and many pharmacies and hospitals withdrew from using it. Directly led to its 20 1 1 net profit decreased by more than 90% year-on-year. 20 1 1 Is the acquisition of three pharmaceutical companies, including Hebei Kangzhi, considered to be done by Kangzhi Pharmaceutical? The nimesulide incident? Have an impact and save leading products? Lose power and influence? An important measure. Therefore, in 20 12 years, the rate of return on operating assets increased significantly compared with 20 1 1 year.
From the annual report of 20 1 1, it can be seen that Kangzhi Pharmaceutical achieved an operating income of 306.742 million yuan, down 2.45% year-on-year, while its total profit was only 5.794 million yuan, down 96.52% year-on-year. What is Kangzhi Pharmaceutical's explanation in the annual report for this phenomenon that the operating income has not dropped sharply, but the profit has plummeted? The main products sold are greatly reduced, the investment in new product advertising is greatly increased, the wages and benefits of employees are increased, and the research and development expenses are increased. . Kangzhi Pharmaceutical Company continued this high-income and low-profit model in the first quarter of 20 12. In the first quarter, Kangzhi Pharmaceutical achieved an operating income of 976,654,380+06,000 yuan, a year-on-year increase of 5,265,438+08%, and a net profit attributable to shareholders of listed companies of 2,557,000 yuan, a year-on-year decrease of 776,5438+08%. The performance forecast of 20 12 semi-annual report released on July 6th also shows that the net profit attributable to shareholders of listed companies of Kangzhi Pharmaceutical is expected to decrease by 75% year-on-year.
References:
[1] Huang Yanyan. Analysis of financial statements of listed companies in China [D]. Harbin Engineering University, 2006.
[2] Li Yanyan. Enterprise competitive strategy based on financial statement analysis of listed companies [D]. Shanxi University of Finance and Economics, 20 12.
[3] Zhaoping Yang. Analysis of PetroChina's financial statements based on Harvard framework [D]. Jilin University, 20 12.
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