Research On Profitability Of Kingsoft Corporation Limited

Over the past 20 years since China entered the Internet era,science and technology have made tremendous progress,the national living standard has been greatly improved,and the per capita education level has also been improved.All these have played a role in promoting the rapid development of the Internet.With the development of Internet technology and its popularization among the public,various Internet enterprises have emerged and developed rapidly as the times require.Internet is a constantly changing industry.Internet enterprises gain profits by providing products and services to users.Profitability is an important indicator of the development of enterprises,and it is of great significance for enterprises to realize value added.Superior profitability can enable enterprises to maintain their core competitiveness for a long time,constantly exploit profit sources and effectively resist various risks in order to achieve the development goals of enterprises.Therefore,enterprises should learn to analyze their own profitability,look for strengths to carry forward,find shortcomings to improve in order to better adapt to the changing market and achieve the rapid development of enterprises.This article chooses KingSoft corporation limited as the research object.In 2018,KingSoft corporation limited jumped to the 14 th place in the Top 100 List of Chinese Internet Enterprises issued jointly by China Internet Association and Information Center of Ministry of Industry and Information Technology.In the fierce competition of Internet enterprises,KingSoft corporation limited has its own unique profitability.Therefore,starting from the financial perspective,this paper first sorted out the relevant concepts and methods of profitability analysis according to the literature,providing a theoretical basis for the study.Secondly,it introduces the main business and profit status of KingSoft corporation limited,and analyses who the main business of KingSoft corporation limited provides services to obtain profits,what services the profit depends on,and what activities it carries out to urge consumers to buy the products or services of KingSoft corporation limited.After a preliminary understanding of the profitability situation,the paper conducts in-depth research on KingSoft corporation limited's profitability and its influencing factors by means of financial analysis.The data are supported by the five-year financial data of KingSoft corporation limited from 2013 to 2017.The DuPont analysis framework is used to evaluate the profitability "quantitatively" with the return on net assets as the core,and the sequential substitution method is used to quantitatively analyze the influencing factors.The influence of sales profit margin,total asset turnover rate and equity multiplier on the return on net assets is analyzed to find out the problem.Assisted by cash receivability and profitability stability to evaluate the "quality" of profitability,cash receivability is mainly evaluated by net profit cash content and sales cash ratio.According to the proportion of operating profit in total profit and the growth of operating income and main business income of each subdivision,the profitability is evaluated whether it can be stable and lasting.At the same time,Tencent Holdings Linited and 37 Interactive Entertainment Mutual Entertainment are selected as the industry comparison.Tencent is the industry leading level,while 37 Interactive Entertainment and KingSoft corporation limited are relatively close in terms of both major profitable business and scale.The data level of each analysis index can be clearer by comparing the two companies,thus making the conclusion more convincing.This article finds that there are some problems in KingSoft corporation limited,such as high operating cost,low turnover rate of total assets and low proportion of operating profit in total profits,which ultimately leads to relatively low return on net assets.In view of these problems and possible shortcomings,this paper puts forward several suggestions to improve KingSoft corporation limited's profitability.It is hoped that the research process of finding problems and proposing improvement suggestions through financial statement analysis can help KingSoft corporation limited to find its own shortcomings in profitability and improve them,so as to enable enterprises to achieve sustainable development,and also hope to provide its own in the industry.His company fully understands its profitability and provides some inspiration for its development.