The Research On The Impact Of Diversification On Financial Performance Of H Group

With the introduction of the state's macro-control policies on the specific regulation of the real estate industry,the real estate industry twists and turns in this situation.Fundamental change happens to the market and competitive pattern,prompting China's real estate enterprises to seek breakthrough through diversification.They wish it would contributes to the the growth of corporate financial performance and the value added of the enterprise.However,could this cross-border diversification achieve continuous growth of corporate financial performance as the manager wishes at the beginning?By reading a lot of documents and announcements,the study finds that the current research on diversified financial performance mainly focuses on the empirical research of large sample.Due to the macroscopic characteristic of large sample empirical research,the paper analyzes problems of real case deeper.Therefore,this study breaks through the conventional research form,and analyzes the diversified financial performance of a real estate company through case study,so as to draw valuable information from the case study and provide reference for the bigger and stronger of the real estate enterprises in mainland.In this paper,the case study method is used to explore the problem in detail,and the problems in the process of diversification are analyzed by the normative research and comparative research method to analyze the influence of diversification to the financial performance of the enterprise.This paper summarizes the relevant theoretical basis of diversification and financial performance and the documents on diversified financial performance at first,introduces the basic situation and diversification background of H group and the current financial situation of the Group.The study reveals that financial performance has declined to varying degrees because of the diversification of the group.And also selected W firm as a comparison object through the use of comparative analysis method to deepens the study.By comparing the differences in profitability of H Group and W Company from 2011 to 2015,the study indicates that H Group's higher return on net assets than W firm is due to the high debt ratio,and the negative contribution of the diversified business leg the Group's net assets Rate beind.At the same time,the chain of alternative analysis of the Group's revenue growth and asset growth does not match,leading to the decline of total asset turnover rate and then leading to the decline of total return on assets of H Group;By comparing the growth ability of H Group and W Company,the study analyzed the impact of the Group's non-real estate business on the net profit of the Group,the result is that H group has to undertake so much burdens which the non-real estate businesses throw.By comparing the operating capacity of H Group and W firm,the paper reveals that the diversified business depend on the related businesses so close,which affects receivable turnover rate of the Group,and that is undoubtedly a potential danger for real estate company that value Cash flow that much.To sum up,this paper argues that H Group's unrelated diversified business has a negative impact on the Group's financial performance.At the same time this study put forward several recommendations: when promotes its diversified business,besides taking full advantage of enterprise's resource,the company must take the synergies of the business into account.In addition,diversification must pay attention to keep cash flow steady,and cannot make obstacles to the health development of the main industry.The research can provide reference for the development of diversification discoveries of other real estate companies,and also has some positive significance to promote the healthy development of the real estate industry.