Comparing Investment Values Of Listed Chinese And American Automobile Companies Through Financial Perspective

Automobile industry is one of the most important indicator of industrialization,and it is the pillar industry for many developed countries.With the improvement in living standard,people have higher requirements for transportation.The consumption level of automobile continues to raise and the global automobile sales keep increasing every year.Following the enactment of the Obama’s manufacturing policy,various countries start to pay more attention to their manufacturing industry.Automobile as a traditional manufacturing industry will embrace new opportunities to grow.Nowadays,automobile is a fundamental industry for our economy.Automobile industry can help generate many jobs and improve the mobility of capital.Automobile industry has great economic significance for our country.After 30 years of development,Chinese capital market has become more mature and people’s investment behaviors have changed rapidly.People’s investment has transformed from focusing on pure speculation activities to focusing more on the long-term growth potentials.Value investing require investors to understand the national economic policies,the current industry situation as well as the companies’ ranking and performance.Investors rely on data to analyze the performance of,and make predictions about,the future direction of a company’s stock price.One of the most important resources of reliable and audited financial data is the annual report,which contains the firm’s financial statements.Investors can easily obtain the companies’ annual financial statements through the companies’ websites.Except that,financial statement ratios can also reveal valuable information about a company’s finances,such as profitability,efficiency in managing assets,and whether the company has too much debt.This essay will analyze the investment potentials of both Chinese and American automobile companies through two aspects.On one hand,this essay will use the traditional ratio analysis and trend analysis,evaluating the company’s performance through the debt ratio,return on assets and return on sales.On the other hand,this essay will use these financial statement ratios to build comprehensive investment models for those publicly traded companies.These models will use the principal component analysis and the objective method to analyze the investing potentials of various listed Chinese and American automobile companies.By adopting the principal component analysis and the objective method together,we can have a more complete picture of the companies’ performance.With the assistance of companies’ stock prices,we can examine the feasibility of the model in order to provide accurate reference for investors and provide valuable improvement information for managers.To conclude,the global automobile market is still in great demand and there’s enormous investment potential in the automobile industry.In general,American automobile companies show greater advantage in regard to both single investing indicators and comprehensive investing indicators.But Chinese companies are still worth consideration,especially those companies with outstanding market performance.Investors should choose companies based on their investment potential rankings,profitability,capital market conditions,stock market level and other indicators in order to gain higher returns with limited risks.Chinese automobile industry should further develop their management and research and development abilities.They should also improve their international competitiveness through acquisition and reorganization.