Financial Analysis Of Chinese Medicine Enterprises Under Harvard Framework

The traditional Chinese pharmacology is unique to Chinese nation, and the industry of traditional Chinese medicine is a special participant in China’s market-oriented economy featuring socialism with Chinese characteristic,which plays a significant role in the development of domestic economy and maintaining the diversity of China’s market-oriented economy. Meanwhile,the 13 th five-year plan mentions that we should build up a healthy nation,and boost the development of specific plan in the traditional Chinese medicine and national medication industry. Therefore, the companies from traditional Chinese medicine industry are facing golden opportunities to develop themselves. It is hard to neglect brands like Yunnan Baiyao,given the fact that innovation is main theme of this era. As one of the first national innovation-style companies,Yunnan Baiyao incorperated company is leading in the industry of traditional Chinese medicine. Not only has it applied the famous prescriptions to medicine,it also involved in the innovative research of personal care products with the traditional prescriptions,which opens up a new era that the usage of traditional Chinese medicine can be extended to the area of personal care products,and breaks the monopoly of the market formed by foreign companies such as Uniliver and P&G. Analyzing the driving force of Yunnan Baiyao’s development is a valuable lesson for other traditional Chinese medicine companies so as to develop themselves.Traditional financial analysis reports only focus on the analysis of financial information while Harvard analysis framework is an analysis tool that uses both the financial and non-financial information in a comprehensive way. Given the characteristic of Harvard framework, the analysis of Yunnan Baiyao is based on the Harvard framework and the stagnancy in the traditional Chinese medicine industry, which analyzes the trends from the development strategy "new Baiyao, broader sphere of health",which takes innovation as its essence, the quality of flowing assets such as the fixed assets by accounting checks, stocks and financial reports from 2010 to 2015, eventually we find out that the debt paying ability and profitability of Yunnan Baiyao outplay other reference companies, the root cause is that Yunnan Baiyao’s asset efficiency is way above the level of its rivals, especially in the areas of stock turnover and receivable turnover, which guarantees the healthy cash flow and stable development. Besides Yunnam Baiyao attaches great importance to investing in innovative research, it enjoys decent prospect in the industry and it is a valuable model for its counterparts to learn from., thus we can overcome the limitations of traditional financial report analysis and find out the driving force of profitability and core competiveness of the industry in an all-around way, and the analysis of Yunnan Baiyao can be a lesson for its counterparts to learn.