Correlation Of Asset Quality And The Ability To Grow

As the new force of the national economy and the most active partof market economy, the small and medium-sized enterprises have anextremely important role in the expansion of employment, an activemarket and promote economic development, maintaining socialstability. As a leader in the SMEs, Small board of listed companies hasto be faced with the test of sustained and stable development. Theacademe has made a large amount of research to the growth ability, andgained great meaningful study achievements. Basing on thepre-condition of domestic and international research of growth ability,this paper analyzes the asset quality relationship between the assetquality and the growth ability of small board listed companies in China.This paper chooses the small board of listed companies ofMachinery manufacturing, petrochemical plastics industry andElectronics industry as the research objects. We collected the financialdata from2009-2010, for example, the growth rate of total assets, netasset growth, main business revenue growth, profit growth rate of mainbusiness, the growth rate of net assets per-share and earnings per-sharegrowth rate as the growth measurement. We use principal componentanalysis to build a comprehensive growth indictor, and then establish themulti-dimensional regression model to test the impact of the corporateasset quality to the growth ability of small board listed companies. The empirical results show that: the quality of corporate assets ingeneral have a major impact on the growth of SMEs capacity. Weconclude the results of the empirical study as follows:①Thenon-performing asset will restrict the growth ability of the enterprise fordifferent industries in varying degrees.②Earning power of assets canimprove the growth ability of enterprises.③T hereare different bestliquidities of assets for different companies. In order to improve thegrowth ability, the companies should find the best liquidity of assets forthemselves.④Ability of efficient assets to obtain cash also indicates thatcorporate future will have good growth prospect. Finally, we take somesuggestions for SMEs to achieve their growth ability to enhance fromdifferent angles: at the macro level, we master suitable efforts forrational industrial structure of each industry-oriented and serve to guidethe operational management of the assets in order to promote theupgrading of the enterprises growth ability. At the micro level, SMEs’managers enhance their growth ability how to make better assetmanagement decision and improve asset quality recommendations.