Research On Financial Statement Analysis Of AE Co., Ltd

A large number of foreign enterprises invested in China since the reform and opening up. Up to now, the foreign enterprises experienced a golden age for 30 years in China. Most of the foreign enterprises in China are mainly in processing trade by taking the advantage of china’s abundant cheap labor and tax incentives to manufacture products in China and export goods to other countries. But, China’s economic development and the improvement of national income forced enterprises to raise workers’wages. Today, foreign enterprises gradually lost the investment advantages of low labor costs and other costs in China. Without own brands, all OEM/ODM companies are facing the difficult operational situation. Some foreign companies are withdrawing from China.Financial analysis plays very important role in company management. Through the analysis of financial statements, we can evaluate the past performance, understand the business situation and find the operational problems. Using many methods of financial analysis, this paper conducts the financial analysis of AE(the company) based on the data of the financial statements from 2010 to 2013, combined with the audio industry background. According to the above analysis, this paper reveal the following problems of AE such as without own brands, low profit margins, rapid growth in labor costs, lack of cash flow, low inventory turnover rate, heavily dependent on large customers and other issues. Finally, this paper proposes many countermeasures for advice.