Value Investment Analysis Of Company A Based On Financial Report

Since Benjamin Graham and David L. Dodd put forward the basic value analysis theory, the enterprise value analysis based on financial report has been growing to be the major foundation of value investment of a company. This paper provides the reference for interested party to make decision on value investment by giving general evaluation on the financial status and management performance of Company A and its operation strategy.The internal value of this case is to evaluate the past operation status of Company A without covering the future value estimation and financial forecast, which will not influence the value investment decisions. The past situation will reflect the future operation, especially assets and liabilities - the foundation of continuous operation, cash flow - the process of continuous operation, and profit - the result of continuous operation, which give a whole picture of company operation. Therefore, the conclusion based on such an analysis is credible and reliable for making decisions on value investment. Moreover, this research may of paper focuses on financial report analysis, together with other analysis such as operation strategy.The company A has been making significant progress in improving short term liquidity and capital structure, so the utilization efficiency of current assets, such as stock and accounts receivable, was increased, and the operation risks were reduced. More importantly, strong refinancing ability has ensured continuous operation and growing of the company in lack of working capital for 4 years. It is also found that the ownership reward of the company mainly benefits from financial leverage. The reward rate of ownership decreased after the asset-liability ratio was improved in 2006. The return rate of assets has been growing for years because of the increase of sales margins, while little improvement of assets utility has depressed the increase of the reward rate of ownership. Thus, the net profit has been fluctuating obviously since 2003. It's fortunate that the increasing profitability of the company ensures its continuous growing in spite of the intensive competition in aviation industry and the rise of fuel cost. At the same time, in sense of operation and financial strategy, the implementation of financial strategy is based on long term development of the company.In brief, based on the analysis of aviation industry, its financial status and development strategy, Company A has been ready to come into the top four in domestic aviation industry and will embrace a bright future.