Bao Steel’s Financial Statements Analysis

The steel industry has been basic of China’s industrial economy. After entering21st century, China underwent rapid economic industrialization. Driven by economic development and growing demand, China’s steel production capacity has been No.1in the world for sixteen years.While in recent years, affected by global economy recession, steel industry faced great pressure and demand for steel dropped a lot. China’s economy also faced slow growth. China’s steel industry suffered from over production, low price, and increasing costs in raw material, labor costs and environment protection. Lots of steel manufacturers face falling profit, losing money, or even bankrupt.Bao Steel is the second-largest steel manufacturer in the world measured by crude steel output and the largest one in China. This article chooses Bao Steel as the objective, analyzes its strategy, accounting policies and accounting estimates, financial status and future prospects based on Harvard analysis framework.Firstly this article introduces the Harvard analysis framework’s structures and analysis steps. Then based on background of world steel industry and that of China, this article analyzes China’s steel industry by using Potter’s Five Forces Analysis and Bao Steel’s development strategies. And based on Bao Steel’s financial data in recent five years, this article analyzes its accounting policies, accounting estimates, financial statement, financial ratios, and also differences between Bao Steel and its competitors. Finally, this article discusses Bao Steel’s future risks and put forward recommendations for reference of Bao Steel and other steel manufacturers’future development.