A Study On The Financial Performance, Policy And Strategy Of Suning And Gome

Suning was founded in1990in Nanjing China,2004July, Suning (Suning Appliance (002024)) listed in Shenzhen, become the first domestic IPO listed home appliance chain enterprises, as of December31,2012, Suning achieved sales revenues of98.3billion Yuan, net profit of2.5billion Yuan. Gome was founded in1987January,2004June Gome Appliance Co (HK.0493) listed in Hongkong, as of December31,2012, Gome achieved sales revenues of49.1billion Yuan,800million Yuan loss. Suning and Gome are the leaders of domestic home appliance retail chain industry, are both facing the era of e-commerce line of business integration adjustment, these provide a basic condition for our comparative analysis.This paper is divided into eight chapters. The first chapter is an overview of the study, including research background, research significance and research framework. The second chapter analysis the influence of the macro environment for the home appliance retail chain industry, use the PEST method to analysis from four aspects:political and legal, economic, social, technological change. The third chapter introduces the basic situation of Suning and Gome. The fourth chapter is the analysis of Suning and Gome’s financial statements, analysis of financial statements from the balance sheet, income statement and cash flow statements. The fifth chapter is the comparative analysis of financial index, are analyzed from four aspects of profitability, asset management ability, liability management ability and the cash generation ability. The sixth chapter is the decomposition analysis of ROE, self sustainable growth and influence factors of EVA. The seventh chapter is the evaluation of financial policy and the analysis of financial strategy matrix. The eighth chapter is the conclusions and recommendations.This paper collected the2008-2012annual financial statements of Suning and Gome, through the comparative analysis in the two company’s financial performance, financial policy and financial strategy, the authors found that Suning’s financial situation was better than Gome. Suning is better than Gome in profitability, asset management ability, liability management ability, cash generation ability, ROE and value creation ability, but with the implementation of the2012national macro-control measures and the development of online home appliance retail, there are more competitives in home appliance retail chain industry, the environment of this industry is worsen, the profitability of Suning and Gome is showing a downward trend, in2012Gome even lossed. The authors suggest, Suning and Gome should speed up the operation ability, strengthen the construction of the logistics base, more investment in IT, through these ways to build their own core competitiveness, promote the OTO fusion, to build value chain activities, create more value for suppliers and consumers, and also improve their profitability, so that they can bring more benefits for shareholders. After this study the author felt more deeply understand on how to use the financial analysis to realise the company’s overall situation, to a certain extent, this study also provide references for the investors and managers in decision making. It is a pity that the2013annual report of Gome has not been announced by April10,2014, the paper failed to reflect the new situation of the two companies in2013.