Business Ratios For Listed Companies

Listed companies performance evaluation is becoming an important part of business management and investment analysis along with the development of China stock market. Listed companies performance evaluation can help management and outside investors, loaners or other interest related person to make decisions. Business ratios are the vital tools.This article take Haier (Stock Code: 600690) as an example to explain how to use business ratios to help us evaluate the company performance. Haier seems has a great capability to cover loans and to get profits in the traditional financial ratios system. Bus as we all know, there are so many limits among the financial ratios which may lead a wrong conclusion. After adding cash flow analysis to this system and deeply consideration of running system mode, the efficiency of working, labor cost, technology innovation ability, we found that there are some potential risks. By combining the financial and non-financial ratios, we draw a conclusion about Haier actual distribution capacity and competitive strength in the market.Besides that, we selected a sample from the SH stock market for analyzing. And we suggested that more consideration about listed company's industry character and its capital structure maybe helpful for liquidity ratio analysis. Making use of The Realization Principle to understand ratios when the company adopts commercial notes to pay for the bill. Thinking about the influence of connected transactions. Using cash flow related ratios to amend the traditional ratio results is a suggested way to evaluate the real performance of listed companies.At last, we suggest that industry analysis and corporation strategic analysis is necessary for ratios understanding.