Research On BYD’s Financial Performance Under The Background Diversification

Last several years,the demand for cars in the domestic market is still growing.,the competition between domestic automobile enterprises and foreign automobile enterprises has become increasingly fierce,and the industries have converged to a certain extent.Meanwhile,due to the increasingly serious natural environment problems and the impact of energy shortage,the state began to introduce relevant preferential policies to support the development of new energy industry.In order to adapt the market tendency,broaden profit sources and seek new economic growth points,BYD chose to implement diversified operation.BYD is a representative enterprise implementing diversified management in China’s domestic automotive products.Over the years,BYD has achieved diversified development from a single business focusing on battery and mobile phone assembly to new energy vehicles,Internet finance,it and urban rail transit.Although BYD’s diversified operation has expanded the business scale and dispersed certain business risks,its profitability has not reached the expected level,and the contributions of different business units to the enterprise’s benefits are quite different.As a result,it is needful to reasearch the financial performance of BYD to find the problems existing in the process of BYD’s diversified operation and put forward the specific measures.This text takes BYD Company as a case study.Firstly,this paper expounds the concepts and related theories of diversification and financial performance,introduces the general situation of BYD and the current situation of the company’s diversified operation,evaluate the financial level of BYD under the diversified business backgroud,finds the problems existing in the company’s financial performance,and puts forward targeted solutions.This paper mainly uses the financial index method and EVA economic value-added method to evaluate the financial performance of BYD.After analysis,it is found that BYD has weak solvency under the background of diversified operation;Insufficient collection capacity of accounts receivable;High inventory turnover rate and large inventory scale;Insufficient profitability,unstable source of profit and other problems.In order to figure out the matter existing in the company’s financial performance and optimize the company’s diversified operation,this paper starts from optimizing the capital structure and improving the solvency;Improve the collection ability of accounts receivable;Put forward targeted measures and suggestions on improving inventory management system,optimizing product portfolio and strengthening main business.The purpose of this text is to help BYD identify the questions existing in the financial performance under the implementation of multiplex operation,and put forward constructive measures and suggestions combined with the current situation of BYD,so as to provide reference for BYD to improve its financial ability and business situation.