Empirical Research Of Affection For Business Performance By Fixed Assets And Current Assets Ratio

The research of quantitative composition and ratio of fixed assets and currentassets will serve to substantiate and improve the theory of corporate financialinvestment including the theory of single asset investment and assets portfolioinvestment and to further the assets theory and optimize the structure of long-termequity capital short-term working capital. The significance of this thesis lies in theoperability and practicability of its research result. The problem studied in this thesisis quantitative relation between fixed assets occupancy and current assetsconsumption happening in public companies on a day-to-day basis. Though higherratio of current assets (less investment) over fixed assets will render the financial riskslower and funds operation more flexible, it tends to be more unfavorable to thebusiness performance under certain conditions. This thesis combines the study offixed assets and current assets ratio with that of business performance and validatesthe theory of fixed assets and current assets with practical data from public companies,which method contributes to address problems, stabilizes corporate operation qualityand ensures the substantial improvement of business performance.The thesis takes1,416data samples of public companies in Shanghaimanufacturing industry between the year2001and2008and conducts analysis of theeffect of fixed assets and current assets ratio over business performance. The businessperformance indexes taken as samples are mainly net assets yield. In the thesis, amultiple regression model demonstrating the effect of fixed assets and current assetsratio over business performance under controlled variables is established andempirical analysis is conducted using EViews statistics software. It is found throughanalysis that the linearity effect of fixed assets and current assets ratio over businessperformance varies greatly in every financial year and industry. In general, fixedassets and current assets ratio is positively correlated with business performance, yet itis insignificant. The fixed assets ratio is positively correlated with businessperformance, yet it is also typically insignificant. The linear relation of current assetsratio and business performance is unstable, positive in some cases and negative inothers. The total assets turnover is positively correlated with business performanceand this correlation is significant. Through analysis, it is concluded that to rationalizeasset configuration, optimize assets structure and enhance assets operation efficiencyis a crucial approach to improve business performance. A number of practicalsuggestions are proposed in the thesis to better resources configuration and assetsmanagement and to provide guidance in terms of corporate financial management practice.The thesis is divided into six parts. Part I is an introduction generally describingthe background for the selection of the topic of the thesis and the significance of theresearch; Part II is reference documents analysis and theoretical foundationpresentation, introducing relevant theories and domestic and overseas empiricaldocuments related to fixed assets, current assets and business performance.; Part III isthe empirical research design covering the definition of research targets and samples,the selection of explanatory variables and explained variables, the proposal ofresearch assumptions and the establishment of research model; Part IV is theempirical research conclusion and analysis–The empirical conclusion is reachedthrough the establishment of research model and the empirical conclusion is thenanalyzed; Part V is the status quo and suggestions, which addresses the problems withpublic companies in China’s manufacturing industry in terms of fixed assets andcurrent assets. Suggestions are made for the optimization of assets structureaccordingly; Part VI is the summary of the thesis.