A Comparative Study On Financial Performance,Financial Policy And Financial Strategy Between Jiuzhitang And Dong-EE-Jiao

As the representative of the Chinese culture with characteristics,traditional Chinese medicine has been paid great importance by the country.Several policies issued recently by our country show that the traditional Chinese medicine has been upgraded into a national strategically level and will step into a new developing stage.Insiders estimate that traditional Chinese medicine industry will face great revolution and development in the next decade.In face of such market environment combining opportunities and challenges,it will be key factors for an enterprise to develop greatly and stand out in the intense competition that the formulation and revision of financial strategy fitting the development of the enterprises based on their own core competitive advantages as well as sustainable sales and profits by adopting reasonable business strategy and financial policy.This thesis selects two representative listed corporates majoring in medicine manufacture,namely Jiuzhitang and Dong-E-E-Jiao in traditional Chinese medicine industry as the research object.Their financial performance is interpreted by means of financial rate analysis,three-dimensional analysis,major financial index analysis and so on.And their financial strategies are also explored by using a matrix showing financial strategy so as to comment on their financial policies and put forward suggestions.This thesis consists of seven chapters.Chapter I describes background of research,including theme,meaning,framework of this paper.Chapter II analyzes the status of traditional Chinese medicine industry,and introduces the profile of two companies.Chapter III adopts the three-dimensional analysis method to interpret the financial statements to understand the financial situations of two companies.Chapter IV makes a comparative analyzes of the main financial indicators of two companies to show the comprehensive strength and financial characteristics of two companies.Chapter V makes a deep financial analysis through the decomposition of the five financial indicators.Chapter VI explores financial strategies of two companies using the financial strategy matrix,and evaluates and makes recommendations on the four major financial policies are combining with the financial strategy analysis.Chapter Ⅶ summarizes the full text of the analysis and makes conclusions and recommendations.The analysis of this thesis shows that traditional Chinese medicine,under the support of the government,is expected to usher in a rapid development.As old and famous Chinese patent medicine manufacturers,the two companies will have better prospects.Through the financial analysis and comparison of the two companies,it can be found that Dong-E E-Jiao corporation has better financial performance than that of Jiuzhitang with profound advantages in profitability,asset liquidity,solvency,cash creation and value creation.Both companies adopt conservative financial policy with low levels of debt,abundant cash assets and strong solvency.The financial strategy matrix analysis shows that the two companies are basically value-created businesses,Dong-E-E-Jiao has made a healthy balance of working capital in the general operation,but the Jiuzhitang is facing a shortage of funds for sustainable development.The author suggests that Jiuzhitang should operationally strengthen the management of cash flow,grow the actual net operating cash flow,make a proper increase in the asset-liability ratio,make effective use of financial leverage,and reduce capital cost to enhance the operating profits of the enterprise.For manegenment aspects,it should reduce the proportion of divided shares to retain more funds for the follow-up development of the enterprise,and in the strategic areas it should increase investment in research and development of new products and promote supply layout of raw materials.It is suggested that the Dong-E-E-Jiao should operationally strengthen the management of the cost of the operation,control the inventory scale and improve the efficiency of asset management.For managerment aspects,it should make full use of financial leverage to create more value for the enterprise and increase proportion of divided shares to return more to consumers;in the strategic areas,it should expand channels to sell and try to achieve diversified operation to develop more gelatin derivatives by taking advantage of brand.