Financial Analysis Of GM Dairy Based On Harvard Analysis Framework

As China’s continuing urbanization of the towns and villages,the improvement of living standards across the country and national policies enacted to encourage childbirth,people’s demand for dairy products will increase significantly,which will in turn stimulate the rapid development of China’s dairy products industry.In this favorable policy environment,the dairy products market holds great potential for consumer growth.GM Dairy,which is at the top of the dairy industry,is gradually widening the gap with MN Dairy and YL Dairy and is at risk of being pushed out of the top tier of the industry.The paper analyses GM Dairy’s overall business situation using the Harvard analytical framework,with the expectation that it will help the company’s management to know more completely about the company’s operations and financial position.Using GM Dairy as a case study,the thesis draws on the Harvard analytical framework to select selected information from the representative 2017-2021 financial statements to conduct a financial analysis of GM Dairy.In terms of strategic analysis,the Porter’s Five Forces model was applied to analyze the industry environment in which the company operates,and analyze the company’s own strengths and weaknesses as well as opportunities and risks in the external market of GM Dairy through a SWOT analysis to provide recommendations for competitive strategy decisions.In terms of financial analysis,both longitudinal and cross-sectional analyses were conducted,focusing on the company’s ability to service its debt,its operations and its profitability,together with a Du Pont analysis,which was based on the core indicator of net equity margin;in terms of outlook analysis,the development opportunities for GM Dairy were analyzed,and the expected development prospects were positive.The prospect for GM dairy products is considerably bright,but its profitability is reduced by low profitability of assets,weak debt servicing capacity and a poor product mix.Taking this into account,GM Dairy should strengthen asset management,reduce idle fixed assets and improve the efficiency of asset use;adjust the asset and liability structure to improve debt servicing capacity;accelerate the upgrading of product structure and enrich product types,etc.,in an effort to facilitate enterprises to enhance the quality of development and generate more and more profits.The dissertation case study belongs to the dairy industry,and it serves as a reference and inspiration for similar analyses of dairy companies in the industry.