Research On The Financial Performance Evaluation Of Listed Companies In Coal Industry

Coal is one of China's most important energy sources and plays an important role in economic development. As the upstream industry of electricity, steel, chemicals and building materials, the coal industry is a basic industry in China. The financial performance of coal listed company affect the performance of the whole industry much. Only good financial performance can guarantee the coal enterprises fulfill their social responsibility well. Without good financial performance, we can't get a harmonious development between enterprises and the society, between enterprises and environment; we can't upgrade and optimize the industrial structure to ensure long-term sustainable development.Referring to the financial performance evaluation of listed coal companies, shareholders of the coal corporation will evaluate the performance of managers properly and develop effective incentive measures to avoid managers'short-sighted behavior, managers will identify the gap between their enterprises and the top, then, find ways to narrow it or identify the core competence and maintain it; creditors, investors and government will get the relevant performance information of those listed coal companies to make decisions to maximize their interest.Using the objective indicator selecting method and empowerment approach and referring to previous studies and the basic information of listed coal companies, the financial performance evaluation system of China's listed coal companies is established based on data from financial reports of 2009. Based on the financial data, the fiancial performance of listed coal company is evaluated. Indicators are selected with the method of principal component analysis and stepwise regression analysis (PCA-SRA) and are weighted with the entropy method to establish the evaluation system. The evaluation system reflects the basic information of enterprises'from four aspects:solvency, operation capacity, profitability and development capacity. And then the overall financial evaluation of the industry is conducted based on the financial data of 2009.Finally, taking "Zhengzhou Coal&Electric Co.LTD" for example, the financial performance evaluation of one specific company is conducted based on the financial data from 2000-2009.And also relevant proposals are put forward in the end.This paper includes seven chapters:The first chapter is an introduction. First, the background and significance of the research are introduced. Then, the current research status of this topic is discussed. That includes the current research status of financial performance evaluation, coal industrial financial performance evaluation and listed coal industrial financial performance evaluation. At last, the brief summary of the content and research methods are put forward.The second chapter is an overview of the coal industry and the listed companies in this industry. After a basic introduction of China' coal industry, the PEST analysis and Porter'Five Forces Model are conducted to analyses the macro-political environment and industrial environment detailedly. Non-financial factors, such as companies'scale, ownership, regional distribution, overseas investment, safety and environmental protection, are also discussed.The third chapter is indicator selection and empowering methods. In the indicator selection part, after a brief introduction of commonly used methods, the PCA-SRA method is described detailedly. In the empowering method part, after the introduction of some empowering methods and their applications, the entropy method which is chosen by this paper is described detailedly. This chapter is providing theoretical preparations for the next chapter for indicator selection and weight.ChapterⅣis the financial performance evaluation system of listed coal companies. With the PCA-SRA method, indicators reflecting solvency, operation capacity, profitability and development capacity are selected based on the financial data of 2009 of the coal listed companies. And the weights of the selected indicators are given by the entropy method. After the data process, the financial performance evaluation index system of listed companies in China' coal industry is established in this chapter.ChapterⅤis the financial performance evaluation of listed coal companies. The financial performance evaluation of listed coal companies is conducted horizontally under the frame of the evaluation system established last chapter based on the financial data of 2009.According to the result, listed coal companies in China are divided into five levels:excellent, good, fair, low, lower. In the end, analysis is made to typical companies in each level and recommendations are raised for different stakeholders.ChapterⅥis the financial performance evaluation on Zhengzhou Coal&Electic Company. Taking this company for example, the vertical financial performance evaluation is conducted, including both ability of one aspect and overall comprehensive ability. Comparisons and analysis of financial evaluation are made from solvency, operation capacity, profitability and development capacity, and the overall financial performance evaluation of the company is conducted based on the financial data from 2000-2009.ChapterⅦis the summary and prospect of this research. After the conclusion of this paper, some of the inadequacies of this research are pointed out.The main innovation of this thesis includes:1. The construction of financial performance evaluation index system of listed companies in China's coal industry. According to the framework of the existing evaluation system, the requirements of the relevant politic documents, indicators are selected from the solvency, operation capacity, profitability and development capacity. The selection methods and the indicator-weighted methods are objectively based on financial data of all companies in the industry. It is objective, relevant, time-based. Under this method, with different industry data each year, indicators and weights will be adjusted accordingly to avoid the shortcomings of existing methods like subjective, unchangeable and so will increase the accuracy of evaluation results.2. The horizontal evaluation of financial performance of listed coal companies in China's coal industry in specific year. With the established financial performance evaluation system, the horizontal analysis and evaluation of financial performance of China's 26 listed coal companies in 2009 are raised and recommendations and measures are proposed. It contains not only comparative analysis between listed companies in coal industry and large-scale state-owned enterprises, but also comparative analysis on financial performance evaluation within the coal industry. Evaluation objects include almost all comparable listed coal companies when writing this paper to conduct a comprehensive analysis and evaluation and avoid the shortcomings of small sample size of previous studies. According to the evaluation result, listed companies in China's coal industry are divided into 5 levels:excellent, good, fair, low, lower.3. The longitudinal financial performance evaluation of specific listed coal company. With the same method and procedure, according to the last 10 years'financial data of Zhengzhou Coal&Electic Company, the company's financial performance evaluation index system is established to evaluate and analyze its financial performance of the last 10 years and make recommendations and countermeasures. That includes not only different capacity evaluation of solvency, operation capacity, profitability, development capacity, but also the overall financial performance evaluation and analysis of different years. With innovation 2, it is combining horizontal analysis and vertical analysis, unilateral ability evaluation and overall financial performance evaluation to make a more systematic and comprehensive analysis and evaluation.