Financial Analysis Of Luxi Company Limited Based On Harvard Analysis Framework

Chemical industry is the basic industry and pillar industry of national economy,especially the development of fine chemical industry is restricting the development of many new industries in China and fine chemicals may become a new economic growth point.Therefore,the operation status of chemical enterprises has received a lot of attention in recent years and the State issues various policies to regulate the chemical industry and purify the market environment.Luxi Chemical is the abbreviation for Luxi Chemical Group Co.,Ltd.It is located in Liaocheng,Shandong Province and it was listed on the Shenzhen Stock Exchange in 1998.The financial status and future development of the company have a major impact on the economic development of Liaocheng.Therefore,this paper selects Luxi Chemical as the research object,and based on comprehensive and systematic financial analysis of this enterprise,I will make some evaluation and have a comprehensive understanding of the financial situation of Luxi Chemical.I hope this can provide ideas for companies in the same industry that need to find a direction for strategic transformation and also can puts forward feasible suggestions for the future development of enterprises.Traditional methods of financial analysis are insufficient.Therefore,this paper chooses the Harvard analysis framework which can make up for the deficiency of traditional financial analysis methods to analysis the financial statements of Luxi Chemical for 2013-2017.The paper introduces theory and literature relevant to Harvard analytical framework,strategic analysis models and tools first.Secondly,the basic situation of Luxi Chemical is briefly introduced and I focus on an analysis of its basic financial situation.It reflects that the financial situation of the company is good but unstable,so in-depth analysis of the financial situation of the enterprise is required.After that,this paper makes strategic,accounting,financial and prospect analysis in turn,according to the basic step of Harvard’s analytical framework.Through strategic analysis of Luxi Chemical,we can master the development status of the enterprise’s industry and the type of strategy implemented by the enterprise at present is integration strategy and cost lead strategy.Through accounting analysis of enterprises,I have identify the key accounting items affecting the financial situation of enterprises and also analysis the quality of key accounting items and the reliability of financial analysis findings can be ensured to some extent.Based on strategic and accounting analysis,financial analysis focused on the evaluation of the ability of a business to pay a debt,create profit,develop and operate and analyze the cash flow structure of the enterprise.Du Pont analysis method is also used to make a comprehensive analysis of the financial situation of enterprise.According to the foregoing analysis,this paper makes predictions about prospects for the chemical industry,strategies for the development of enterprise and potential risks to enterprise that it may encounter in its development.Finally,based on the aforementioned analysis,this paper summarizes the problems existing in Luxi Chemical.Besides,the corresponding suggestions are put forward.Through the analysis of this article,we can draw the following conclusions: Luxi Chemical is still in a strategic transition and chemical new materials are in the growth period and some of the company’s financial indicators performed better.For businesses in the same industry,especially for a single fertilizer company,some of the measures taken by Luxi chemical have reference significance.But there are weaknesses that need to be addressed and the specific performance is the degree of product differentiation needs to be strengthened and the company’s strategic positioning needs to be changed.Safety and environmental awareness need to be enhanced.Influenced by industry is a lot.Company’s investment in R&D is insufficient and personnel structure is unreasonable and capital structure is unreasonable and financial risk is greater.Therefore,enterprise needs to make corresponding improvements to the problem.For example,seize the opportunity period and change strategic positioning in a timely manner.It should insist in technological innovation and increase the technological content of products or economic added value.The company should increase R&D investment and promote the transformation of results.And It should adjustment of capital structure and reduce financial risk.At present,Luxi Chemical overall financial performance is better.If improvements are made in a timely manner,there is bound to be higher quality growth.