Research On Financial Performance Evaluation Of Chinese Iron And Steel Industry

In2012’s China iron and steel planning BBS, the steel association personagepoints out steel industry is overcapacity obviously as a result of the reduced ordersand increased inventory. Since the fourth quarter of2011, the main iron and steelbusiness of steel enterprises has begun to loss. In January and February of2012, theiron and steel industry has been in the industry losses. In the face of falling of thedomestic market demand, raw material prices high fluctuation, high inventory andstock slow, steel price cost line low volatility, financial strain and the losses of theenterprise and a series of complex problems, the situation is very serious. In front ofthe serious existence crisis and challenges, each iron and steel enterprises is facedwith how to improve his own core competition.The key of cultivating the corecompetitiveness is to possess a certain quality and various professional skills and allkinds talents. Therefore, how to fairly and impartially evaluate the operatingperformance of the iron and steel enterprise has become an important issue in thecurrent financial research. Meanwhile, correctly playing the guiding role of enterpriseperformance evaluation and establishing a scientific and effective mechanism ofincentive and constraint has more practical significance in improving the iron andsteel enterprise management status and level and enhancing enterprise corecompetence.The dissertation reviews the relevant research literatures and draws lessons fromdomestic and international enterprise performance evaluation theory and practiceexperience, combines with the actual situation of iron and steel industry, bases onincentive theory. By linking theory with practice, the dissertation uses documentaryresearch and field survey method to obtain first-hand information. The principalcomponent analysis is used to screen performance evaluation index of the solvencystatus and operational capabilities position, profitability situation, capacitydevelopment status and market price.14evaluation ratioes are obtained, which areevaluating enterprise’s solvency status with current ratio, time interest earned ratioand debt-to-long capital ratio; evaluating enterprise’s operational capability with totalassets turnover, fixed assets turnover and receivables turnover; evaluating enterprise’sprofitability with cost profit margin and gross margin; evaluating enterprise’s growthability with operating profit growth rate, total assets growth rate, main businessrevenue growth rate and capital preservation and appreciation rate; evaluatingenterprise’s market performance with price to earning ratio and price to book ratio. Then the entropy method is used to determine the index weight of the independentvariables. Then the article implements an empirical study on2011China’s steelindustry listed company. Analysis on the date of2011the steel industry listingcorporation, growth ability has the greatest influence on the iron and steel enterprise’sperformance evaluation, which followed by solvency status and operationalcapabilities. The profitability of the influence on the iron and steel enterpriseperformance evaluation is more outstanding, and the market performance is a littleweak.Then the dissertation puts forword the concept of input-output space, points outthe measures to expand the enterprise space. Based on the space theory, the articleconstructs a comprehensive performance appraisal system of the iron and steelenterprise, including the evaluation of production plant, offices, and high-tech productpromotion center.