金融研究方法.docx

金融研究方法.docx

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金融研究方法

ThecapitaloperationofMideainelectricalequipmentmarketresearch

1Abstract

ThisessayisabouttheelectricalequipmentcompanyandweselectedMideaasourmaincompanytoinvestigate.TheotherscompaniesforcomparisonisGree,KonkaandTCL.Wefindthesefourcompaniesannualstatementin2006to2009tocomparedtheirdata,andweselectedtheyearof2009asourbasedyear.Theessaycomparedtheyear'sdataandthefourcompany'sdata.

Ourpurposeistosurveytheelectricalequipmentmarketcapitaloperation.Weusemanyformulastocalculatethecompanyannualstatementdata,asthecashration,totaldebtration,equitymultiplier,inventoryturnover,receivablesturnovercurrentratio,quickratio,totalassetturnoverandreturnonassetsandreturnonequity.

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2Introductiontothecompany

Name

Introduction

MideaGroupwasestablishedin1968.NowitisoneofthelargestmanufacturingandexportationbasesofhouseholdappliancesinChina.MideaGroupcurrentlyhas70,000employees.Theirmarketingnetworkcoversalloverthenation,andtheyhaveadozenbranchesintheUnitedStates,Germany,Japan,HongKong,SouthKorea,CanadaandRussia.MajorproductsbyMideaGroupincludeair-conditioners,electricfans,electriccookers,refrigerators,microwaveovens,waterdispensers,washingmachines,electricheaters,dishwashers.

Website

3Explanationonthefinancialratios

3.1Short-termsolvency,orliquidity,ratios

CurrentRatio:

Aliquidity ratiothatmeasures acompany'sabilitytopayshort-termobligations.

QuickRatio:

Anindicatorofacompany'sshort-termliquidity. Thequickratiomeasures acompany's abilitytomeet itsshort-termobligationswith itsmostliquidassets.

CashRatio:

Theratioofacompany'stotalcashandcashequivalents toitscurrentliabilities. The cash ratioismostcommonlyusedasameasureofcompanyliquidity.Itcanthereforedetermineif,andhowquickly,thecompany canrepay itsshort-termdebt.

3.2Long-termsolvency,orfinancialleverage,ratios

TotalDebtRatio:

Aratiothatindicateswhatproportionofdebtacompanyhasrelativetoitsassets.Themeasuregivesanideatotheleverageofthecompanyalongwiththepotentialrisksthecompanyfacesintermsofitsdebt-load.

Equitymultiplier:

Thisratioshows acompany's totalassets perdollarofstockholders'equity.

3.3Assetutilization,orturnover,ratios

Inventoryturnover:

Aratioshowinghowmanytimes acompany's inventoryissoldandreplacedoveraperiod.

Receivableturnover:

Anaccountingmeasureusedtoquantifyafirm'seffectivenessinextendingcreditaswellascollectingdebts. Thereceivablesturnover ratioisanactivityratio, measuringhowefficientlyafirmusesitsassets.

Totalassetturnover:

Theamountofsalesgeneratedforeverydollar'sworthofassets.Itmeasures afirm'sefficiencyatusingitsassetsingeneratingsalesorrevenue-thehigherthenumberthebetter.

3.4Profitabilityratios

Returnonassets（ROA）:

Anindicatorofhowprofitableacompanyisrelativetoitstotalassets. ROAgivesanidea astohowefficient managementis atusingitsassetstogenerateearnings. 

Returnonequity（ROE）:

Theamountofnetincome returned asapercentage ofshareholdersequity. Returnonequity measuresacorporation'sprofitability byrevealinghowmuch profitacompanygenerates withthemoneyshareholdershaveinvested.  

4Calculationthefinancialratiosofthecompanyanddiscussbytechniquesoftime-trendanalysisandpeergroupanalysis.

4.1ThedifferentratiosinMideafromtheyear2006to2009.

4.1.1Short-termsolvency,orliquidity,ratios

ratio

2009年

2008年

2007年

2006年

currentratio

1.12

0.86

1.07

1.03

quickratio

0.82

0.54

0.48

0.49

cashratio

0.20

0.23

0.16

0.14

Currentratio,quickratioandcashratioasshort-termsolvencyratiosareintendedtoprovideinformationaboutMideacompany’sliquidity.

Fromthefirstblueline,it’scompare2007and2006thattheMideacompanyhadnosignificantincreaseinliquidityratio.It’salsosaidthatthecompany’sshort-solvencymaintainedstandards.In2008yearwhichwasaffectedbythefinancialcrisis,currentratiowas0.86（lessthan1）,meanthatnetworkingcapitalisnegative.Whenin2009,itpeakedat1.12whichindicatesliquidity.

Inthesecondredline,from2006to2009,theMideacompany’squickratioremainedrelativelyincreasing.Althoughthecompany’liquiditywaslow,therewasagradualrisetrend.

Therewasafluctuationinthetrendofcashratiointhethirdgreenline.Inthisperiod,thecompanykeptarelativelylowcashratio,whichwasmeanthatanefficientuseofcashandothershort-termassets.

Inconclusion,thegraphshowsthatMideahasabetterliquidityandcanbeartheshort-termrisk.Besides,italsomayindicateangooduseofassets.

4.1.2Long-termsolvency,orfinancialleverage,ratios

ratio

2009年

2008年

2007年

2006年

totaldebtratio

0.60

0.69

0.67

0.72

equitymultiplier

1.67

3.21

3.06

3.57

Wecanseefromtheabovechart,Midea’stotaldebtratiogrowsslowlybutatalowerlevelin06-09year.Fromthecreditorposition,Midea’spossessesweakerdebt-repayingabilityandfinancialriskishigher,soenterprise'smainrisksundertakebythecreditor.09comparedwithpriorthreeyearsratiohadaslightdecline,andthefinancialrisklower.

Midea’sequitymultiplierhadasignificantdecreasethatthemixvalueabout1.9comparedwiththepastthreeyears.It’sexplainthatthecompany’ssolvencyimproved,financialriskreductionandowners’equityincreasedthebearabilityofdebt-repayingrisk.

Inotherwords,Midea’slong-termsolvencyratioismoreappropriate,managerscaneffectivelyuseofshareholders'moneytohelpshareholdersconductthelargescaleofoperationwithlessmoney.

4.1.3Assetutilization,orturnover,ratios

ratio

2009年

2008年

2007年

2006年

inventoryturnover

6.35

8.49

4.66

4.27

receivablesturnover

10.13

15.43

22.41

21.58

totalassetturnover

0.15

1.94

1.92

1.62

Inventoryturnoverisameasureoftheutilizationoftheinvestmentininventory.Thehigherthisratiois,themoreefficientlywearemanaginginventory.From2006to2007,theinventoryturnoverrateincreased.Thatmeantthefirmuseditsassetstogeneratesalesefficiently.Butfrom2007to2009,theinventoryturnoverratewasdecreased,themanaginginventorywaslessefficientlyandlessliquidity.

Receivablesturnovergivessomeindicationofhowfastwecansellproducts.From2006to2008,Media’sreceivablesturnoverweregrownsteady.Butin2009,thereceivablesturnoverisalittlefellback.ThatmeansMedia’sabilityofcollectingoutstandingcreditaccountandreloanedthemoneyisweaker

Movingawayfromspecificaccountslikeinventoryorreceivables,wecanconsiderthetotalassetturnover.In2006,thetotalassetturnoverofMediawaslow,butfrom2007to2009,thetotalassetturnoverwasretainedabout1.9.ItshowsthatMediauseditsassetstogeneratesalesefficientlyandintensively.

4.1.4Profitabilityratios

ratio

2009年

2008年

2007年

2006年

returnonassets

0.08

0.07

0.10

0.04

returnonequity

0.20

0.21

0.30

0.15

Thelinechartprovidestheinformationaboutreturnonassetsandreturnonequity.ThistworatiosshowtheprofitabilitymeasuresofMidea.Accordingtothechart,theoveralltrendbetween2006and2009increased.In2006,returnonassetswas0.041andreturnonequitywas0.15.ThehighestpointsofROAandROEwerein2007andthevalueofROAwas0.1andROEwas0.3.Afterthegrowthperiod,ROAandROEdroppedsignificantlybecauseofthefinancialcrisisin2008.ThevalueofROAincreasedto0.08,andROEwas0.20.ThehighvaluesofROAandROEmeansthatthehighabilityofprofit.So,in2007,Midea’sabilityofprofitwasthehighestbetween2006and2009.

4.2Thedifferentratiosindifferentfirmsin2009.

4.2.1Short-termsolvency,orliquidity,ratios

ratio

美的

格力

康佳

TCL

currentratio

1.12

1.04

1.24

1.27

quickratio

0.86

0.90

0.86

0.93

cashratio

0.20

0.23

0.08

1.56

Fromthechatabove,wecanseethattheCurrentRatioandQuickRatioofthefourcompaniesarearound.AlloftheirCurrentRatiosarehigherthan1whichmeansthatnetworkcapitalispositive,sotheyarehealthyfirms.WecanseethatTCLhavehigherratiosthantheotherthreecompanies,itmeansthatTCLhavebetterabilitytopayitsbillsovertheshortrunwithoutunduestress.In2009,MideahaveamiddlelevelofShort-TermSolvencyinthefourcompanies.TheseShort-TermSolvencyshowthatTCLhasthehighestabilityofcashflowinthefourfirmsin2009.

4.2.2Long-termsolvency,orfinancialleverage,ratios

ratio

美的

格力

康佳

TCL

totaldebtratio

0.6

0.79

0.57

0.72

equitymultiplier

1.67

4.84

3.3

3.59

Asitiswellknownthat,theequitymultiplierandtotaldebtratiobelongtothelong-termsolvencyorfinancialleverage,ratios,whichareintendedtoaddressthefirm’slong-runabilitytomeetitsobligations.

Fromthelinechartabove,wefindthatintheequitymultiplierpart,Mideafelltohitthelowestpointinthe4firms.Ontheotherhand,Greereachedapeak.ThatmeansGreehashigherfinancialleverageandit’srelying.

Inthetotaldebtratiopart,Greealsogotthehighestpoint,andKonkatookthelowest.Thetotaldebtratioallofthefirmsarelessthan1,thatindicatesthatthe4firmshavemoreassetsthandebet.So,Greehasastrongerabilitytomeetitsobligationsinthelong-runthantheother3firmsduringtheyear2009.

4.2.3Assetutilization,orturnover,ratios

ratio

美的

格力

康佳

TCL

inventoryturno