Financial Performance Analysis Of L Company's Diversification

In today's increasingly high market economy,if enterprises want to thrive in society,they must find their own development path.Diversification strategy can inject new vigor and vitality into enterprises,disperse their operational risks and improve the efficiency of capital use.It is a sharp sword to increase profits and improve the financial situation of enterprises,but if it is not used well,it will make the business situation of enterprises worse.The financial performance of an enterprise can reflect whether the application and implementation of business management strategy can really contribute to the business performance of the enterprises,and the effect of a diversified business strategy can also be presented through its financial performance.This paper takes the daily chemical industry as the background,and choose L company as the research object,and makes an in-depth analysis of its financial performance under diversified operation.This paper mainly uses the case analysis method.Firstly,it analyses the current situation of L company's diversified operation,including the types,background and operation of various business products,and also analyse the internal and external environment of L company's diversified operation.Then,we adopt the index analysis method to analyze the financial performance of L company's diversification operation through the financial indicators of L company's profitability,operation ability,solvency and growth ability,and compare it with R company and industry average level.We conclude that its profitability is not strong,its operation ability is weak,its solvency risk is high,and its growth ability is poor in the period of diversification operation.Then,in order to understand more clearly the impact of L company's business operation on the company's overall financial performance,the profitability and growth of L company's five business sectors were studied.It was found that business with better operating efficiency in the daily chemical,pharmaceutical and fine processing business sectors had a positive impact on L company's overall financial situation.Finally,according to the results of the previous analysis,we find out the reasons that affect the financial performance of L company's diversification,such as excessive diversification,excessive decentralization of resources,rising operating costs,inadequate cost control,single marketing channels and declining brand competitiveness;and put forward corresponding countermeasures and suggestions,including boosting the main industry,reducing diversification,strengthening cost control and reducing costs.Expenses,as well as the development of sales channels,increase brand publicity.