Research On The Financial Performance Of CRRC’s Assets Reorganization

Under China’s current socialist market economy system,state-owned enterprises are the mainstay of social economy.Under economic globalization,the trading activities between countries become more frequent,and state-owned enterprises are experiencing fierce market competition.How to increase corporate profits while expanding scale,and ensure the preservation and appreciation of state-owned assets in the increasingly tough domestic and foreign competitions has become an important issue for the development of state-owned enterprises.One of the effective ways is asset restructuring,which can integrate resources,expand markets and achieve accelerated development.Financial performance evaluation can make intuitive judgments on the effectiveness of these reorganization activities,and provide improved opinions and guidance programs for the reorganization companies themselves and the same types of enterprises based on the financial performance evaluation results.As a representative of China’s four new inventions,China’s high-speed rail has become China’s new business card and has gradually expanded its popularity worldwide.How can the high-speed rail industry further enhancing its competitiveness,expanding its market share,and meeting the needs of the market’s development is an unavoidable issue.Throughout the world,the key to the internationalization of enterprises is how to become bigger and stronger.Undoubtedly,the fastest way to achieve their goals is through mergers and acquisitions.On October 27,2014,CSR and CNR began their merger.As a large-scale merger,the reorganization has completed quickly,and has a wide range of influence.In result,a wide range of social concerns have been triggered,and social circles are also full of expectations for the results of this restructuring.This article selected the case of CRRC’s reorganization of assets,for it is the first case of China’s first state-owned enterprises to combine strengths with the purpose of strategy.Its reorganization method,which has certain representation,can be used to explore a new path for the reform of state-owned enterprises in our country.This paper uses the case study method for research.The purpose of the paper is to study the financial performance indicators and financial strategy changes of CRRC Asset Restructuring from a financial perspective,and to observe the changes in the financial performance of CRRC before and after restructuring.From the point of view of the merger,this article studied how this reorganization affects the financial status of the company.Firstly,this paper reviewed the theoretical literature on the domestic and foreign asset reorganization financial performance evaluation methods,and listed the development process of financial performance evaluation methods at home and abroad.According to the focus of this case’s financial performance evaluation,this paper selected the financial indicator research method and the financial strategy matrix method to analyze the case data,and listed the relevant literature on these two financial evaluation methods at home and abroad.Secondly,this paper analyzed the classic theories that need to be applied in the study of financial performance and asset reorganization are elaborated separately.At the same time,a brief introduction to the selected financial performance evaluation methods is provided.In the analysis of the case,a brief introduction was made including the historical background of the company,the market and business background at the time of the merger,the merger process,and the merger method.According to the two selected financial evaluation methods,the financial performance of CRRC Assets Restructuring was analyzed separately.Through the analysis,it can be concluded that after the merger,CRRC achieved an improvement in performance,as well as the increased the utilization efficiency of corporate funds.However,there are still some problems in the financial integration and development of the company after the merger.For example,one year after the completion of the merger,the indicators such as the financial performance of China Motors Corporation has experienced a decline of different magnitudes.Based on the calculated index ratios and financial matrix,there are four major problems found in the company’s financial performance.First of all,the business growth has slowed down.Secondly,the income has achieved its maximum point.Thirdly,the capital turnover capacity is insufficient.Lastly,compared with the creation of value,the funds show surplus state.While presenting questions,this article also gives advice to companies.Finally,based on the analysis of this case,some research implications were obtained.This paper proposes the points that other state-owned enterprises need to pay attention to when choosing assets.These points can help companies making correct decisions before reorganization and avoiding detours.