Analysis Of Profitability And Research On Improvement Strategies Of Shagang Co.,Ltd

The steel industry is an important part of China’s national economy and occupies an indispensable position.In recent years,in the context of China’s slowing economic growth,the steel industry is facing overcapacity,oversupply,high energy consumption,environmental protection and other problems.The development prospects of the steel market are unclear and the economic benefits are low.The supply-side reform proposed since December 2015 has alleviated the economic dilemma of steel enterprises,but it has not completely resolved the current dilemma faced by the steel industry.Facing the pressure of "overcapacity",enterprises must improve their profitability and competitiveness if they want to occupy a favorable position in the market.Among many profitability analysis models,Du Pont model is a mature model with a long history of development and wide applicability.Therefore,this article selects Shagang Co.,Ltd.,a representative enterprise among private steel enterprises,for research.Using the traditional Du Pont model,starting from the return on net assets,it analyzes its operating net interest rate,total asset turnover rate,and average equity multiplier.Aiming at the limitations of the traditional Du Pont model,the model was improved by introducing three indicators,namely,net profit cash flow ratio,after-tax operating profit ratio,and financial expense ratio,to analyze the profitability quality of Shagang Co.,Ltd.When analyzing operating capacity,current asset turnover and real estate turnover are considered separately.When analyzing solvency,consider the long-term and short-term solvency of the company.And combine quantitative and qualitative analysis to increase the applicability of the model.This article selects Masteel Co.,Ltd.as a benchmarking company,and analyzes its corresponding indicators using factor analysis method.It is found that the three indicators have different contributions to the difference in net asset and net interest rate.However,from the total difference contribution rate,it can be seen that the overall profitability of Shagang Co.,Ltd.is relatively good.Through detailed calculation and analysis of operating net interest rate,total asset turnover rate,and average equity multiplier,it is found that Shagang Co.,Ltd.also has many issues that need attention or improvement.In view of the current operating situation and shortcomings,the following countermeasures and suggestions are proposed for Shagang Co.,Ltd.to improve its profitability: First,improve its working capital management ability and improve operational efficiency.Second,make full use of leverage to achieve optimal capital structure.Third,adjust business strategies to seize the market.Fourth,improve research and development capabilities and enhance innovation capabilities.Fifth,improve talent management strategies and retain employees.