Financial Analysis And Diagnosis For YNBY Group

With the unveiling of a series of health reform policy, the government support bringsabout a promising future for the medicine industry. As the medicine industry is a typicalnon-cyclical industries, which is concerned with people’s livelihood, the investors pay a closeattention to it. The YNBY is a leading enterprise in the traditional Chinese medicine industry,with State-owned background, and it keeps a rather good growth. In2011, the price andvolume of the basic drugs are both increased, and the health care division, the main force ofwhich is the pharmaceutical consuming product, has also been further developed. The openedup of new markets brings in revenue as well as the risk of company operation, and thefinancial data are often able to reflect the company’s most realistic operating conditions. Inview of this, the financial diagnosis of the YNBY is based on the financial analysis theory,combined with the author’s experience over the years.In this paper, we analyze and interpret the financial statements of YNBY in nearly5years (2006-2010), by the use of trend analysis and structural analysis to understand thecompany’s financial situation and the company’s financial development in recent years; by theuse of ratio analysis to conduct a preliminary judgments of the financial situation (profitability,risk and growth); by the use of radar chart to compare and analyze the enterprise with DEEJ,an excellent enterprise in traditional Chinese medicine industry; by the use of DuPont analysisto identify the causes of gap between YNBY and DEEJ, the factors that affect the profitabilityof the company, and further analysis the influence degree of each factor on the rate of returnon equity capital. Eventually, we use the financial strategy matrix analysis to determinewhether the company is in the value-creating stage.Study indicates that the YNBY is in the value-creating stage, but the company is facingfund shortage problem in the process of development. To solve this problem, YNBY need toimprove its sustainable growth rate, which involves two aspects: First, increasing operationalefficiency, and the second, improving financial policies. As to the operational implementationlevel, we think that the following three aspects should be done to achieve its sustainablegrowth for the YNBY, which includes expanding product lines while controlling the rawmaterial, increasing efficiency while maintaining stability, and fully guaranteeing the mobilityof financing.